Question

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 at 8%. The first principal and interest payment is due on January 1, 2020. Caticlan Company made the required payments during 2020 and 2021. However, during 2021 Caticlan Company began to experience financial difficulties, requiring Kalibo to reassess the collectibility of the loan. On December 31, 2021, Kalibo Bank determines that the remaining principal payment will be collected but the collection of the interest is unlikely. The present value of 1 at 8% is as follows: For one period 0.93 For two periods 0.86 For three periods 0.79 4. What is the loan impairment loss on December 31, 2021? a. 420,000 b. 210,000 c. 630,000 d. 0 5. What is the interest income to be reported by Kalibo Bank in 2022? a. 223,200 b. 143,200 c. 240,000 d.

          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 at
8%. The first principal and interest payment is due on January 1, 2020. Caticlan
Company made the required payments during 2020 and 2021. However, during 2021
Caticlan Company began to experience financial difficulties, requiring Kalibo to
reassess the collectibility of the loan. On December 31, 2021, Kalibo Bank determines
that the remaining principal payment will be collected but the collection of the interest
is unlikely. The present value of 1 at 8% is as follows:
For one period	0.93
For two periods	0.86
For three periods	0.79
4. What is the loan impairment loss on December 31, 2021?
a. 420,000
b. 210,000
c. 630,000
d. 0
5. What is the interest income to be reported by Kalibo Bank in 2022?
a. 223,200
b. 143,200
c. 240,000
d.

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 at
8%. The first principal and interest payment is due on January 1, 2020. Caticlan
Company made the required payments during 2020 and 2021. However, during 2021
Caticlan Company began to experience financial difficulties, requiring Kalibo to
reassess the collectibility of the loan. On December 31, 2021, Kalibo Bank determines
that the remaining principal payment will be collected but the collection of the interest
is unlikely. The present value of 1 at 8% is as follows:
For one period 0.93
For two periods 0.86
For three periods 0.79
4. What is the loan impairment loss on December 31, 2021?
a. 420,000
b. 210,000
c. 630,000
d. 0
5. What is the interest income to be reported by Kalibo Bank in 2022?
a. 223,200
b. 143,200
c. 240,000
d.

Added by Joshua J.

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