Reference no: EM132912579

On July 1 2021, roger co. discounted its own note of 200,000 to a bank at 10% for one year. On December 31, 2020, Chou Bank has a loan receivable of P2,000,000 from a borrower that it is carrying at face value and is due on December 31, 2025. Interest on the loan is payable at 9% each December 31. The borrower paid the interest due on December 31, 2020 but informed the bank that it would probably miss the next two years' interest payments because of financial difficulty. After that, the borrower is expected to resume the annual interest payment but it would make the principal payment one year late, with interest paid for that additional year at the time of principal payment.

The present value of 1 at 9% is as follows:

One period 0.917

Two periods 0.842

Three periods 0772

Four periods 0.708

Five periods 0.650

Six periods 0.595

Question 1: How much was the net proceeds received by roger from the transaction?

Question 2: Compute for the present value of the loan receivable on dec 31 2020

Question 3: compute the impairment loss to be recognized on Dec 31 2020

Question 4: Compute for the interest income in 2021.