On January 2, 2019, Naruto Company received an P800,000, 8%, 2 year 5 points note from Grey Corporation as settlement for an outstanding past due account. The interest is payable every December 31 and the interest due in 2019 were collected on time. In 2020, Grey Corporation was in financial crisis, and as a result of this development, Naruto Company expects that the interest for 2020 will not be collected and that only P600,000 of the principal amount will be collected in equal annual installment over the next three years starting December 31, 2021. As of December 31, 2020, the market rate of interest for a similar instrument is 9% (PV of an annuity for 3 years at 9% is 2.577) What amount of impairment loss should Naruto Company recognize on December 31, 2020 related to its notes receivable?

Answer rating: 100% (QA)

P 357740 impairment loss On 12312020 compute for the present value of the future cash flows ... View the full answer