Star Bank has a P 10,000,000 loan to Estrella Realty, which was invested by the latter in real estate development. Due to the economic downtrend in the real estate business, Estrella Realty is experiencing declining sales and is likely to default on its obligation to Star. Estrella requests for a restructuring of its loan with Star. Prevailing market rate for similar obligations at the time of the restructuring is 8%. Accrued interest receivable on the loan at December 31, 2020 is P 1,000,000. Based on stated interest rate of 10%. Star had not previously recognized any impairment on this Estrella note based on 12-month expected credit loss on date of initial recognition.

• Reduction of principal to P 9,000,000.

• Condonation of accrued interest

• Extension of maturity date to December 31, 2022

• Reduction of interest rate to 8%, payable annually on December 31

Give the entry in the books of Star to record the impairment assuming the following agreements. Round off present value factors to four decimal places. Round of numbers to whole numbers. Show discount or premium, if any. Separate figures by comma.

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