1. Compute the Impairment Loss on 2020
2. Compute the Allowance For Loan Impairment on Dec 31, 2020
3. Compute the Carrying amount of the Loan on Dec 31, 2020
4. Compute the Carrying amount of the Loan on Dec 31, 2021
5. Compute the Carrying amount of the loan on Dec 31, 2022
6. Journal Entries from 2020-2022

Problem 7-12 (IAA) On December 31, 2020; 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, 2023. 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 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, 2020. 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