PT PQR invests in corporate bonds with a tenor of 10 years worth IDR 10 million. Interest is paid annually. The effective interest rate and the bond coupon is 5%. The probability of default (PD) for a period of 12 months is 0.5%. Loss Given Default (LGD), which is the amount of loss that will occur if the bond defaults is 25%. The probability of default (PD) for the lifetime of the bond is 20%. Loss Given Default (LGD), which is the amount of loss that will occur if the bond defaults is 25%. PT PQR uses an internal credit rating system from 1 to 10, with 1 representing the lowest credit risk, and 10 representing the highest credit risk. PT PQR considers a 2 level increase as a significant increase in credit risk. PT PQR considers grade 3 or lower to be a low credit risk. At the initial recognition date, the bonds were valued at grade 2, and on December 31, 2020, the bonds were valued at grade 5.

Requested:

1. Does PT PQR need to reduce the value of the bonds?

2. If so, calculate how much the impairment loss was. Make a journal for the impairment loss if at the beginning of the year the allowance for impairment losses is Rp 1,200,000