Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 16, Problem 16.22E
To determine
Under IFRS, the amount of impairment loss or gain and how it would be reported.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On January 1, 2018, Almost Inc. loaned P3,000,000 to Stay Company. Under the loan agreement, Stay
Company is to make an annual principal payment of P600,000 for 5 years plus interest at 8%. The first
principal and interest payment is due on January 1, 2019. The required payments were made by Stay
Company for 2019 and 2020. However, during 2020, Stay Company began to face financial difficulties,
requiring Almost Inc. to reevaluate the collectability of the loan.
On December 31, 2020, Almost Inc. determines that it will be able to collect the remaining principal, but it
is unlikely that the interest will be collected.
The following present value factors are taken from the table of present values:
PV of 1 at 8% for:
1 period
2 periods
3 periods
0.92593
0.85734
0.79383
What is the present value of the expected future cash flows as of December 31,
2020?
O 1,800,000
O 2,146,260
O 1,669,962
O 1,428,894
1. On January 1, 2011, Taguig
Company issued 3-year bonds
with face value of P5,000,00O
at 99. The nominal rate is 10%
and the interest is payable
annually on December 31.
Additionally, Taguig Company
paid bond issue cost of
P150,000. What is the
effective rate that should be
used for these bonds? Round
off present value factors to
FOUR DECIMAL PLACES and
the effective rate to two
decimal places (e.g., 15.17%). *
Your answer
Sheridan Company in its first year of operations provides the following information related to one of its available-for-sale debt
securities at December 31, 2025.
Amortized cost
Fair value
Expected credit loss
(a)
$50,800
41,600
12.450
Your answer is correct.
What is the amount of the credit loss that Sheridan should report on this available-for-sale security at December 31, 2025? (Do
not leave any answer field blank. Enter O for amounts.)
Amount of the credit loss. $
9200
Chapter 16 Solutions
Intermediate Accounting (2nd Edition)
Ch. 16 - Prob. 16.1QCh. 16 - Is reporting an investment at its cost considered...Ch. 16 - Prob. 16.3QCh. 16 - Prob. 16.4QCh. 16 - Prob. 16.5QCh. 16 - Prob. 16.6QCh. 16 - What categories can managers use to classify...Ch. 16 - When is the equity method of accounting for...Ch. 16 - Prob. 16.9QCh. 16 - Can companies apply the fair value option to all...
Ch. 16 - What is the fair value hierarchy for investment...Ch. 16 - Prob. 16.12QCh. 16 - Prob. 16.13QCh. 16 - Prob. 16.14QCh. 16 - Prob. 16.15QCh. 16 - Prob. 16.16QCh. 16 - Prob. 16.17QCh. 16 - Deutsch Imports has three securities in its...Ch. 16 - Prob. 16.2MCCh. 16 - Prob. 16.3MCCh. 16 - Prob. 16.4MCCh. 16 - Prob. 16.5MCCh. 16 - Prob. 16.6MCCh. 16 - Prob. 16.7MCCh. 16 - Prob. 16.1BECh. 16 - Prob. 16.2BECh. 16 - Debt Investments, Trading. Using the information...Ch. 16 - Prob. 16.4BECh. 16 - Prob. 16.5BECh. 16 - Prob. 16.6BECh. 16 - Prob. 16.7BECh. 16 - Prob. 16.8BECh. 16 - Prob. 16.9BECh. 16 - Prob. 16.10BECh. 16 - Prob. 16.11BECh. 16 - Prob. 16.12BECh. 16 - Prob. 16.13BECh. 16 - Notes Receivable. Aaron Anatole accepted a...Ch. 16 - Prob. 16.15BECh. 16 - Prob. 16.16BECh. 16 - Prob. 16.17BECh. 16 - Debt Investments. Impairments. IFRS. For each debt...Ch. 16 - Prob. 16.19BECh. 16 - Prob. 16.1ECh. 16 - Prob. 16.2ECh. 16 - Prob. 16.3ECh. 16 - Prob. 16.4ECh. 16 - Prob. 16.5ECh. 16 - Prob. 16.6ECh. 16 - Prob. 16.7ECh. 16 - Debt and Equity Investments, Available-for-Sale...Ch. 16 - Prob. 16.9ECh. 16 - Equity Investments without a Readily Determinable...Ch. 16 - Prob. 16.11ECh. 16 - Prob. 16.12ECh. 16 - Prob. 16.13ECh. 16 - Equity-Investments, Equity Method. Book Value of...Ch. 16 - Prob. 16.15ECh. 16 - Prob. 16.16ECh. 16 - Notes Receivable. Each of the following three...Ch. 16 - Notes Receivable. On January 1, 2018, Racine...Ch. 16 - Debt Investment, Held to Maturity, Impairments....Ch. 16 - Debt Investment, Impairments, IFRS. Repeat E16-19...Ch. 16 - Prob. 16.21ECh. 16 - Prob. 16.22ECh. 16 - Prob. 16.23ECh. 16 - Prob. 16.24ECh. 16 - Prob. 16.25ECh. 16 - Prob. 16.1PCh. 16 - Debt Investments, Trading. Freder Software Group...Ch. 16 - Prob. 16.3PCh. 16 - Equity Investments, Readily Determinable Fair...Ch. 16 - Prob. 16.5PCh. 16 - Prob. 16.6PCh. 16 - Prob. 16.7PCh. 16 - Prob. 16.8PCh. 16 - Prob. 16.9PCh. 16 - Prob. 16.10PCh. 16 - Prob. 16.11PCh. 16 - Equity Investments, Equity Method, Fair Value...Ch. 16 - Prob. 16.13PCh. 16 - Prob. 16.14PCh. 16 - Prob. 16.15PCh. 16 - Prob. 16.16PCh. 16 - Prob. 16.17PCh. 16 - Prob. 16.18PCh. 16 - Prob. 16.19PCh. 16 - Prob. 1JCCh. 16 - Prob. 2JCCh. 16 - Prob. 1SSCCh. 16 - Prob. 1BCCCh. 16 - Prob. 2BCC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The following information pertains to Mane Lending Corporation’s loan portfolio as at December 31, 2021: A. Mane Lending Corporation considers all loans over 90 days past due to be credit-impaired based on historical experience with recovering the associated debt. B. The aging of Mane Lending Corporation’s loan on December 31, 2021 is a follows: Current P 1,400,000 More than 30 days past due 75,000 More than 60 days past due 100,000 More than 90 days past due 125,000 Total P 1,700,000 C. Mane Lending Corporation monitors certain loans more closely on an individual basis given their significance and unique characteristics. These loans are not included in the P1,700,000 loan portfolio. The following information is available without undue cost or effort on an individual loan basis: LOAN AMOUNT PAST DUE STATUS PV OF EXPECTED FUTURE CASH FLOWS 1 P 200,000 90 days P…arrow_forward(a.) Prepare any journal entries you consider necessary, including year end entries (December 31), assuming these investments are managed to profit from changes in market interest rates (held for trading). Mayor Company doesn’t have debt investment before 2020. (b.) Prepare a partial statement of financial position showing the Investment account at December 31, 2020. (c.) If Mayor Company purchase the debt investment to collect the contractual cash flow (held the debt investment to maturity), explain how the journal entries would differ from those in part (a).arrow_forward17. Statement I: If, at the reporting date, the credit risk of a receivable has not increased significantly since initial recognition, interest revenue is calculated based on the amortized cost of the financial asset. Statement II: 12-month expected credit losses is determined for financial asset which credit risk has not increased significantly since initial recognition Statement III: Lifetime expected credit losses is the weighted average of credit losses with the respective risks of a default occurring as the weights. a. All statements are correct b. 2 out of 3 statements are incorrect c. 1 out of 3 statements are incorrect d. All statements are incorrectarrow_forward
- Which of the following is NOT a necessary step for the straight-line method for amortizing premiums and discounts on long-term debt? ( (. O Calculate the remaining premium or discount balance each period. Divide the total premium or discount by the total number of payments. O Determine the original amount of the premium or discount. O Calculate the total number of payments (or periods) that will be made.arrow_forwardDetails for one of the loan of BB Company that is probably impaired during the period is as follows: The company made a loan of P40,000,000 to a customer with similar credit risk to BB Company on January 1, 2021. Interest is receivable on this loan at the end of each year at 2% per annum for the next five years. The loan was properly recorded and classified as amortized cost. The company made and initial assessment of the loan and the total expected credit losses over the life of the loan was P1,000,000. The discount rate applicable was at 2%. On January 1, 2021, the probability of default over the next 12 months was 5%. At December 31, 2021, there was a significant increase in the credit risk on the loan made by BB Company, the expert assessed that the total expected credit losses over the life of the loan was increase to P2,200,000. The discount rate applicable was at 2%. How much is the balance of the allowance for credit losses as of December 31, 2021?arrow_forwardGecko Investments has the following data regarding their debt investments as of December 31, 2021: Original Cost Amortized Cost Market Value Trading Bonds 95 96 97 Available for Sale Bonds 95 96 97 Held-to-Maturity Bonds 95 96 97 1. What is the total amount of gain or loss to be reported as part of other comprehensive income? Give both the amount and whether it is a gain or loss.arrow_forward
- The controllers of Kingbird, Inc. and Pina Corp. both ask you whether their companies can reclassify short-term obligations as long-term. Here are the facts surrounding both companies’ short-term debt.Kingbird, Inc. On December 31, 2017, Kingbird, Inc. has $1,920,000 of short-term debt in the form of notes payable to Michaels State Bank due February 5, 2018. On January 28, 2018, Kingbird issued 19,200 shares of common stock at $75 per share. Kingbird used the proceeds of $1,440,000 from the stock issuance, along with $624,000 in cash to retire the short-term debt and associated accrued interest on February 5, 2018. Kingbird will issue its December 31, 2017 financial statements on February 25, 2018.Pina Corp. On December 31, 2017, Pina Corp. has $2,880,000 of short-term notes payable to Indiana Bank & Trust. The notes are due on January 31, 2018. Pina retired the notes, along with $192,000 in accrued interest, in full on January 31, 2018. On February 11, 2018, Pina obtained…arrow_forwardFleener Company is in the process of refinancing some long-term debt. Its fiscal year ends on December 31, 2016, and its financial statements will be issued on March 15, 2017. Under current IFRS, how would the debt be classified if the refinancing is completed on December 15, 2016? What if instead it is completed on January 15, 2017?arrow_forward1. How much is the impairment loss? 2. What is the AJE to record the loan impairment loss for 2020? 3. What is the carrying value of the loan receivables to be presented in the statement of financial position as of December 31, 2020arrow_forward
- CPA Bank Co. loaned P6,750,000 to a borrower on January 1, 2018. The terms of the loan were payment in full on January 1, 2023 plus annual interest payment at 12%. The interest payment was made as scheduled on January 1, 2019. However, due to financial setbacks, the borrower was unable to make the 2020 interest payment. The bank considered the loan impaired and projected the cash flows from the loan on December 31, 2020. The bank has accrued the interest on December 31, 2019, but did not continue to accrue interest for 2020 due to the impairment of the loan. The projected cash flows are: December 31, 2021, P1,125,000; December 31, 2022, P1,500,000; December 31, 2023, P1,875,000 and December 31, 2024, P2,250,000. The present value of 1 at 12% is 0.89 for one period, 0.80 for two periods, 0.71 for three periods and 0.64 for four periods. What is the carrying amount loan receivable as of December 31, 2021?arrow_forwardConsider the following liabilities of Future Brands, Inc., at December 31, 2016, the company’s fiscal year-end. Should they be reported as current liabilities or long-term liabilities? 1. $77 million of 8% notes are due on May 31, 2020. The notes are callable by the company’s bank, beginning March 1, 2017. 2. $102 million of 8% notes are due on May 31, 2021. A debt covenant requires Future to maintain a current ratio (ratio of current assets to current liabilities) of at least 2 to 1. Future is in violation of this requirement but has obtained a waiver from the bank until May 2017, since both companies feel Future will correct the situation during the first half of 2017.arrow_forward9. On August 20, 2024, Madak Co. decides to invest excess cash of $2,900 by purchasing Wolf, Inc. bonds. At year-end, December 31, 2024, the market price of the bonds was $2,600. The K- investment is categorized as available-for-sale debt Joumalize the adjusting entry needed at December 31, 2024. (Record debits first, then credits. Select the explanation on the last line of the journal entry table) Date 2024 Dec 31 Accounts and Explanation Debit Co Creditarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College