Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PROBLEMS 8.1 Bad Debts on Loans Receivable Excerpts from the 2008 Annual Report for J.P. Morgan Chase & Co. (JPMC) are provided in Exhibit 8.1.

image text in transcribed
PROBLEMS 8.1 Bad Debts on Loans Receivable Excerpts from the 2008 Annual Report for J.P. Morgan Chase & Co. ("JPMC") are provided in Exhibit 8.1. Note that the balance in the allowance for loan losses account at the end of JPMC's fiscal 2006 was $7,279 million, and the balance in their loan asset account was $483,127 million at the same date. Required a. Calculate JPMC's allowance for loan losses as a percentage of gross loans outstanding for each of the three years for which information has been provided. b. What is the dollar value of JPMC's loan write-offs in 2007 and 2008? c. Comment upon JPMC's loan loss provisioning over the periods shown. Do they appear to have used the provision to create hidden reserves? Are they sitting on a "cookie jar reserve or are you expecting a big hit to the income statement in future periods as a result of past underprovisioning for bad loans? PROBLEMS 8.1 Bad Debts on Loans Receivable Excerpts from the 2008 Annual Report for J.P. Morgan Chase & Co. ("JPMC") are provided in Exhibit 8.1. Note that the balance in the allowance for loan losses account at the end of JPMC's fiscal 2006 was $7,279 million, and the balance in their loan asset account was $483,127 million at the same date. Required a. Calculate JPMC's allowance for loan losses as a percentage of gross loans outstanding for each of the three years for which information has been provided. b. What is the dollar value of JPMC's loan write-offs in 2007 and 2008? c. Comment upon JPMC's loan loss provisioning over the periods shown. Do they appear to have used the provision to create hidden reserves? Are they sitting on a "cookie jar reserve or are you expecting a big hit to the income statement in future periods as a result of past underprovisioning for bad loans

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Business Intelligence For New-Generation ManagersCurrent Avenues Of Development

Authors: Jörg H. Mayer, Reiner Quick

6th Edition

3319156950, 9783319156958

More Books

Students also viewed these Accounting questions