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How much is the balance of allowance for impairment loss

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Reference no: EM133017731

Problem - 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 interests 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%.

Required -

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

2. How much is the interest income in 2024?

Reference no: EM133017731

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