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On Dec. 31, 2022, Max Inc. took a loan from Bank by signing a $125,000, 5-year, non-interest-bearing note. The note was issued to yield 9%
On Dec. 31, 2022, Max Inc. took a loan from Bank by signing a $125,000, 5-year, non-interest-bearing note. The note was issued to yield 9% interest. During 2023, Max began to experience financial difficulty. As a result, on Dec. 31, 2023, Bank determined that it was probable that it would receive only $93,750 at maturity. For simplicity, assume that this reflects the probability-weighted amount. The market rate of interest on loans of this nature is now 11%. Both companies prepare financial statements per IFRS 9
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