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The projected cash flows are:

Accounts Receivable December 31, 2018 1,750,000


December 31, 2019 2,000,000
December 31, 2020 1,750,000

1. What is the loan impairment?


2. What is the carrying value of the loan receivable on December 31, 2019?
5. What is the interest income in 2020?

Inventory

13.

14

Loans Receivable 15.

Yokohana Bank loaned 5,500,500 to bargain Company on January 1, 2016. The initial loan
repayment terms include a 10% interest rate plus annual principal payments of 1,100,000 on
January 1 each year. Bargain made the required interest payment in 2016 but did not make the 16.
1,100,000 principal payment nor the 550,000 interest payment for 2017. Yokohama is
preparing its annual financial statements on December 31, 2017. Bargain is having financial
difficulty and Yokohana has concluded that the loan is impaired. 17.

Analysis of Bargains financial condition on December 31, 2017 indicates the principal
payments will be collected, but the collection of interest is unlikely. Yokohana did not accrue the
interest on December 31, 2017.
Answers
Loans Receivable
Accounts Receivable BV of loan receivable 5,500,000
PV of projected cash flows:
Dec. 31, 2018 (1,750,000 x 0.9091) (1,590,925)
Dec. 31, 2019 (2,000,000 x 0.8264) (1,652,800)
Dec. 31, 2020 (1,314,775 x 0.7513) (1,314,775)
Loan impairment loss 941,500

All. For Loan Net loan Interest Payment


Date Loan balance
impairment receivable income received
12/31/2018 5,500,000 941,500 4,558,500 455,850 1,750,000
12/31/2019 3,750,000 485,650 3,264,350 326,435 2,000,000
12/31/2020 1,750,000 159,215 1,590,785 159,079 1,750,000

Inventory

1. 20,000 10.
2. 50,000 11. (8,000)
3. 70,000 12. 18,000
4. 5,000 13. Cost of Sales 90,000
Inventory 90,000
5. 5,000 14. No adjustment
6. 10,000 15. Inventory 50,000
Cost of Sales 50,000
7. 90,000 16. Cost of Sales 5,000
Inventory 5,000
8. 6,000 17. No adjustment
9. -