The following information pertains to Lender A's loan portfolio at December 31, 2020: • Lender A considers all loans over 90 days past due to be credit-impaired based on historical experience with recovering the associated debt. • The aging of Lender A's loans on December 31, 2020 follows: Current More than 30 days past due More than 60 days past due More than 90 days past due P1,400,000 75,000 100,000 125,000 P1,700,000 Total • Lender A 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 P180,000 P200,000 150,000 50,000 1 90 days 2 Current Not calculated 3 60 days 37,000 Other information: Loan 1- The borrower has filed for bankruptcy. Loan 2 - None Loan 3 - The borrower recently lost his job due to an economic recession and was granted a concession to skip payments. Additional information taking into account historical information, current conditions and forward looking information, including actual loss experience and recoveries from the sale of collateral, is as follows: Probability of default in the next 12 months 2% Lifetime probability of default Credit-impaired loans 100% Not credit-impaired loans 5% Loss given default on all loans 25% 17. The required loss allowance at Dec. 31, 2020 is
The following information pertains to Lender A's loan portfolio at December 31, 2020: • Lender A considers all loans over 90 days past due to be credit-impaired based on historical experience with recovering the associated debt. • The aging of Lender A's loans on December 31, 2020 follows: Current More than 30 days past due More than 60 days past due More than 90 days past due P1,400,000 75,000 100,000 125,000 P1,700,000 Total • Lender A 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 P180,000 P200,000 150,000 50,000 1 90 days 2 Current Not calculated 3 60 days 37,000 Other information: Loan 1- The borrower has filed for bankruptcy. Loan 2 - None Loan 3 - The borrower recently lost his job due to an economic recession and was granted a concession to skip payments. Additional information taking into account historical information, current conditions and forward looking information, including actual loss experience and recoveries from the sale of collateral, is as follows: Probability of default in the next 12 months 2% Lifetime probability of default Credit-impaired loans 100% Not credit-impaired loans 5% Loss given default on all loans 25% 17. The required loss allowance at Dec. 31, 2020 is
Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 11EB: Outpost Designs uses the balance sheet aging method to account for uncollectible debt on...
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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Transcribed Image Text:The following information pertains to Lender A's loan portfolio at December 31, 2020:
• Lender A considers all loans over 90 days past due to be credit-impaired based on
historical experience with recovering the associated debt.
• The aging of Lender A's lbans on December 31, 2020 follows:
Current
More than 30 days past due
More than 60 days past due
More than 90 days past due
Total
P1,400,000
75,000
100,000
125,000
P1,700,000
• Lender A 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:
Amount
P200,000
Status PV of Expected Future Cash Flows
P180,000
Loan
Past Due
90 days
Current
1
2
150,000
50,000
Not calculated
3
60 days
37,000
Other information:
Loan 1- The borrower has filed for bankruptcy.
Loan 2 - None
Loan 3 - The borrower recently lost his job due to an economic recession and was
granted a concession to skip payments.
Additional information taking into account historical information, current conditions and forward
looking information, including actual loss experience and recoveries from the sale of collateral,
is as follows: Probability of default in the next 12 months 2% Lifetime probability of default
Credit-impaired loans 100% Not credit-impaired loans 5% Loss given default on all loans 25%
17. The required loss allowance at Dec. 31, 2020 is
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