Bonita Industries has a loan receivable with a carrying value of $126000 at December 31, 2016. On January 1, 2017, the borrower, Sandhill Co., declares bankruptcy, and Bonita estimates that it will collect only 40% of the loan balance.

Assume that on January 4, 2018, Bonita learns that Sandhill Co. has emerged from bankruptcy. As a result, Bonita now estimates that all but $11600 will be paid on the loan. Under IFRS, which of the following entries would be made on January 4, 2018?

Loan Receivable64000

Recovery of impairment Loss

64000

Bad Debt Expense11600

Impairment Loss

11600

No journal entry is allowed under IFRS.

Loan Receivable11600

Recovery of impairment Loss

11600