(b) On 1 January 2018, Duku Bhd made a four-year loan of RM400,000 to Langsat Bhd. The loan is issued at its face value with a coupon rate of 7% payable in arrears. On 1 January 2020, Langsat Bhd's financial condition deteriorated significantly due to termination of a few major contracts. Duku Bhd expects no further interest payment is to be received from Langsat Bhd and estimates that only 40% of the principal amount will be repaid on the redemption date. Duku Bhd has already recognised a loss allowance of RM5,000 in respect of its loan to Langsat Bhd.

Required: Explain how the impairment of the above financial asset should be accounted for by Duku Bhd.