On December 31, 2020, Chase Bank has a 5-year loan renewable with a face value of $5,000,000 dated January 1, 2019 from Roland Company that is due on December 31, 2023. Interest on the loan is payable at 10% every December 31. The borrower paid the interest that was due on December 31, 2019 but informed Chase Bank that interest accrued in 2020 and interest for 2021, 2022 and 2023 ($500,000 each year) will be paid on December 31, 2023, the maturity date of the loan, because of financial difficulty. The PV of 1 at 10% for three periods is .751. What is the loan impairment loss to be recognized on December 31, 2020? a. 1,745,000 b. 1,369,000 c. 243,000 d. 494,000
On December 31, 2020, Chase Bank has a 5-year loan renewable with a face value of $5,000,000 dated January 1, 2019 from Roland Company that is due on December 31, 2023. Interest on the loan is payable at 10% every December 31. The borrower paid the interest that was due on December 31, 2019 but informed Chase Bank that interest accrued in 2020 and interest for 2021, 2022 and 2023 ($500,000 each year) will be paid on December 31, 2023, the maturity date of the loan, because of financial difficulty. The PV of 1 at 10% for three periods is .751. What is the loan impairment loss to be recognized on December 31, 2020? a. 1,745,000 b. 1,369,000 c. 243,000 d. 494,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 30E
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On December 31, 2020, Chase Bank has a 5-year loan renewable with a face value of $5,000,000 dated January 1, 2019 from Roland Company that is due on December 31, 2023. Interest on the loan is payable at 10% every December 31. The borrower paid the interest that was due on December 31, 2019 but informed Chase Bank that interest accrued in 2020 and interest for 2021, 2022 and 2023 ($500,000 each year) will be paid on December 31, 2023, the maturity date of the loan, because of financial difficulty. The PV of 1 at 10% for three periods is .751. What is the loan impairment loss to be recognized on December 31, 2020?
a. 1,745,000
b. 1,369,000
c. 243,000
d. 494,000
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