question archive May I ask for an explanation and solution to the problem for a better understanding
May I ask for an explanation and solution to the problem for a better understanding
Subject:AccountingPrice: Bought3
May I ask for an explanation and solution to the problem for a better understanding. Thank you!
On January 1, 20X9, Fast Bank made a P2,000,000, 8% loan. The P160,000 interest is receivable at the end of each year, with the principal amount to be received at the end of five years. At the end of 20X9, the first year's interest of P160,000 has not yet been received because the borrower is experiencing financial difficulties. The borrower negotiated a restructuring of the loan. The payment of all of the interest for 5 years will be delayed until the end of the 5 year loan term. In addition, the amount of principal repayment will be dropped from P2,000,000 to P1,200,000. The PV of 1 at 8% for 4 periods is .735. No interest revenue has been recognized in 20X9 in connection with the loan. What is the loan impairment loss for 20X9?
a. P1,470,000
b. P1,323,000
c. P667,000
d. P530,000
