Loan Receivable (LR) & Impairment of LR

Numbers 45, 46 and 47

BDO, a financing entity granted a loan to a borrower on January 1, 2023. The interest on the loan is 10% payable annually
starting December 31, 2023. The loan matures in three years on December 31, 2025. After considering the origination fee
charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 12%.

Principal amount 4,000,000

Origination fee charged against the borrower 342,000
Direct origination cost incurred 150,000

46) What is the carrying amount of the loan receivable on January 1, 2023?
A. 4,192,000
B. 3,808,000
C. 4,150,000
D. 3,658,000

47) What is the interest income for 2023?

A. 419,200
B. 380,800
C. 456,960
D. 480,000

48) What is the carrying amount of the loan receivable on December 31, 2023?
A. 4,000,000
B. 3,808,000
C. 3,864,960
D. 4,295,040

49) On January 2, 2022, Kardo Company received an P1,600,000, 8% 2-year note from Alyana Corporation as settlement
for an outstanding past due account. The interest is payable every December 31 and the interest due in 2022 were
collected on time. In 2023, Alyana Corporation was in financial crisis, and as result of this development. Kardo
Company expects that the interest accruing for 2023 will not be collected and that only P1,200,000 of the principal
amount will be collected in equal annual installment over the next three years starting December 31, 2024. The
following interest factors are provided:
Periods Present value of 1 at 8% PV of annuity of 1 at 8%
3 0.7938 2.5771
What amount of impairment loss/bad debts should Kardo Company recognize on December 31, 2023 related to its
note receivable?
A. 903,400
B. 775,400
C. 551,160
D. 697,160

Numbers 49, 50 and 51

On December 31, 2023, BPI, a bank recorded an investment of P7,000,000 in a loan granted to a client. The loan had a
12% nominal interest rate payable annually every December 31. The principal is due in full at maturity on December 31,
2026. Unfortunately, the borrower is experiencing significant financial difficulty and will have difficult time in making full
payment. The bank projected that the entire principal will be paid at maturity and 5% interest of P350,000 will be paid
annually on December 31 of the next three years. There is no accrued interest on December 31, 2023. The present value of
1 at 12% for three periods is 0.71, and the present value of an ordinary annuity of 1 at 12% for three periods is 2.40

50) What is the loan impairment loss for 2023?

A. 1,190,000
B. 2,030,000
C. 4,970,000
D. 0

51) What is the interest income for 2024? 52) What is the carrying amount of the loan receivable on December 31,
2024?
A. 350,000
A. 7,000,000
B. 840,000
B. 6,157,200
C. 697,200
C. 5,566,400
D. 596,400
D. 5,810,000