Johnstone Company has a loan receivable with a carrying
Johnstone Company has a loan receivable with a carrying value of $125,000 at December 31, 2019. On January 1, 2020, the borrower, Ralph Young Industries, declares bankruptcy, and Johnstone estimates that it will collect only 45% of the loan balance.
Assume that on January 4, 2021, Johnstone learns that Ralph Young Industries has emerged from bankruptcy. As a result, Johnstone now estimates that all but $11,500 will be paid on the loan. Under IFRS, which of the following entries would be made on January 4, 2021?
a. Loan Receivable 57 250
Recovery of Impairment Loss 57,250
b. Loan Receivable 11,500
Recovery of Impairment Loss 11,500
c. Bad Debt Expense 11,500
Impairment Loss 11,500
d. No journal entry is allowed under IFRS