Solve the following problem with supporting computations presented in good form: On December 31, 2021, MASAGANA Bank has a loan receivable of P4,000,000 from a borrower that is carrying at face amount and is due on December 31, 2026. Interest on the loan is payable at 9% each December 31. The borrower paid the interest due on December 31, 2021 but informed the bank that it would probably miss the next two years' interest payments because of financial difficulty. After that the borrower is expected to resume the annual interest payment but it would make the principal payment one year late, with interest paid for that additional year at the time of principal payment. Present value of 1 at 9% One periods Two periods Three periods Four periods Five periods Six periods .917 .842 .772 .708 .650 .596 Required: 1. Compute the present value of the loan receivable on December 31, 2021. 2. Compute the impairment loss to be recognized on December 31, 2021. 3. Prepare journal entries from 2021 to 2027.

Solve the following problem with supporting computations presented in good form: On December 31, 2021, MASAGANA Bank has a loan receivable of P4,000,000 from a borrower that is carrying at face amount and is due on December 31, 2026. Interest on the loan is payable at 9% each December 31. The borrower paid the interest due on December 31, 2021 but informed the bank that it would probably miss the next two years' interest payments because of financial difficulty. After that the borrower is expected to resume the annual interest payment but it would make the principal payment one year late, with interest paid for that additional year at the time of principal payment. Present value of 1 at 9% One periods Two periods Three periods Four periods Five periods Six periods .917 .842 .772 .708 .650 .596 Required: 1. Compute the present value of the loan receivable on December 31, 2021. 2. Compute the impairment loss to be recognized on December 31, 2021. 3. Prepare journal entries from 2021 to 2027.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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