On December 31, 2018, Conchita Martinez Company signed a 1,000,000 noninterest bearing note to Sauk City bank. The market interest rate at that time is 12%. The stated interest rate on the note was 10% payable annually. The note matures in 5 years. Considering these data, the bank released cash to the company amounting to 927,908 the total of the present value of the principal and interest. Unfortunately, because of lower sales, Conchita Martinezs financial situation worsened. On December 31, 2022, when the carrying amount of the loan is determined to be 951,968, Sauk City Bank determined that it was probable that the company would pay back only 600,000 of the principal at maturity.

However, it was considered likely that interest would continue to be paid, based on the 1,000,000 loan. The present value of 1 at 12% for 3 years is 0.71178 and the present value of an ordinary annuity of 1 at 12% for 3years is 2.40183

a.) How much is the carrying amount of the note as of December 31, 2019? b.) How much impairment loss should the bank recognize on December 31, 2020?

On December 31, 2018, Conchita Martinez Company signed a 1,000,000 noninterest bearing note to Sauk City bank. The market interest rate at that time is 12%. The stated interest rate on the note was 10% payable annually. The note matures in 5 years. Considering these data, the bank released cash to the company amounting to 927,908 the total of the present value of the principal and interest. Unfortunately, because of lower sales, Conchita Martinez's financial situation worsened. On December 31, 2022, when the carrying amount of the loan is determined to be 951,968, Sauk City Bank determined that it was probable that the company would pay back only 600,000 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the 1,000,000 loan. The present value of 1 at 12% for 3 years is 0.71178 and the present value of an ordinary annuity of 1 at 12% for 3 years is 2.40183 a.) How much is the carrying amount of the note as of December 31, 2019? b.) How much impairment loss should the bank recognize on December 31, 2020