Problem 1: Kalibo bank loaned P5,000,000 to Caticlan company on January 1, 2019. The terms of the
Question:
Problem 1:
Kalibo bank loaned P5,000,000 to Caticlan company on January 1, 2019. The terms of the loan require principal payments of P1,000,000 each year for 5 years plus interest rate at 8%. The first principal and interest payment is due on January 1, 2020. Caticlan company began to experience financial difficulties, requiring Kalibo to reassess the collectability of the loan. On December 31, 2021, Kalibo bank has determined that the remaining principal payment will be collected but the collection of the interest is unlikely. Kalibo Bank did not accrue the interest on Deember 31, 2021. The present value of 1 at 8% is as follows.
Required:
1. What is the loan impairment loss on December 31, 2021?
2. What is the interest income to be reported by Kalibo Bank in 2022?
3. What is the carrying amount of the loan receivable on December 31, 2022?
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen