On December $31,2023,$ Blossom Bank enters into a debt restructuring agreement with Kingbird Inc., which is now experiencing financial trouble. The bank agrees to restructure a $$3\mathrm{.}1-$million, $10\%$ note receivable issued at par by the following modifications: $1.$ Reducing the principal obligation from $$3\mathrm{.}1$ million to $$2\mathrm{.}95$ million $2.$ Extending the maturity date from December $31,2023,$ to December $31,20263.$ Reducing the interest rate from $10\%$ to $8\%$ Kingbird pays interest at the end of each year. On January $1,2027,$ Kingbird Inc. pays $$2\mathrm{.}95$ million in cash to Blossom Bank. Blossom Bank prepares financial statements in accordance with IFRS $9.$ There is no evidence of a significant increase in credit risk and $12-$month expected credited losses are calculated at zero. For simplicity, assume that Blossom Bank had not recognized any impairment prior to this $($although it likely would have done so under the expected loss model$).$ Click here to view the factor table PRESENT VALUE OF $1.$ Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF $1.$

a$.$ What interest rate should Blossom Bank use to calculate the loss on the debt restructuring?

Interest rate$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

b$.$ Calculate the loss that Blossom Bank will accrue based on the debt restructuring. Prepare the journal entry to record the loss.