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How much is the balance of allowance for impairment loss

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Reference no: EM132913120

On January 1, 2020, Atlas Bank entered a 12%, P2,000,000 loan to Angela, Inc. Principal is due on January 1, 2024, but interests are due annually every January 1. Atlas incurred direct origination costs of P176,788 and indirect origination costs of P36,000. In addition, Atlas charged Angela a 2.5% nonrefundable origination fee. The effective rate is 13.84%. How much is the interest income in 2021? (Round-off computations and final answer to the nearest peso)

  • On January 1, 2021, Bane Bank extended a P1,800,000 loan to Faramis, Inc. Principal is due on December 31, 2025, but 12% interest is due annually starting December 31, 2021.
  • On December 31, 2023, Faramis Inc. was delinquent and it was ascertained that the loan is impaired. Bane bank assessed that interest accruing on the loan will not be collected; however, the principal is expected to be received in three equal annual installments starting on December 31, 2024. The current market rate on December 31, 2023, is 14%. (Round-off PV factors to 3 decimal places)

Question 1: How much is the balance of allowance for impairment loss on December 31, 2023, immediately after impairment testing?

Question 2: How much is the interest income in 2024?

Reference no: EM132913120

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