What is the entry to record the modification of the loan

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Reference no: EM132700716

An entity has oustanding bank loan. On december 31 20x1 the entity agrees to the following maodification to tge terms of the loan payable:

The principal is reduced from P 2,800,000 to P 2 500 000.
The bank promises not to collect the accrued interesr of P 400 000.
The nominal rate is decreased from 14% to 9%.
The maturity date is extended from December 3q 20x1 to January 1 20x6. The principal is due in lump sum at maturity date but interest is payable annually at each yaer end. The original effective interest rate 14%. The prevaiking rate on december 31 20x1 is 12%.

Requirements:

Problem a. what is the entry to record the modification of the loan.

Reference no: EM132700716

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