What is the carrying amount of the loan Receivable on December 31, 2017? 19. On December 31, 2016, Oregon Bank recorded an investment of P5,000,000 in a loangranted to a client. The loan has a 10% effective interest rate payable annually everyDecember 31. The principal is due in full at maturity on December 31, 2019.Unfortunately, the crower is experiencing significant financial difficulty and will have difficulttime in making full payment.The bank projected that the entire principal will be paid at maturity and 4% interest orP200,000 will be paid annually on December 31 of the next three years. There is noaccrued interest on December 31, 2016.The present value of 1 at 10% for three periods is 0.75, and the present value of an ordinaryannuity of 1 at 10% for three periods is 2.49.

Loan receivable: It is basically an amount or sum of money which is owned to a creditor by a debtor.…

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What is the carrying amount of the loan Receivable on December 31, 2017?

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 11E

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Question

What is the carrying amount of the loan Receivable on December 31, 2017?

19. On December 31, 2016, Oregon Bank recorded an investment of P5,000,000 in a loan
granted to a client. The loan has a 10% effective interest rate payable annually every
December 31. The principal is due in full at maturity on December 31, 2019.
Unfortunately, the crower 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 4% interest or
P200,000 will be paid annually on December 31 of the next three years. There is no
accrued interest on December 31, 2016.
The present value of 1 at 10% for three periods is 0.75, and the present value of an ordinary
annuity of 1 at 10% for three periods is 2.49.

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