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NORTHSOUTH Bank loaned P5,000,000 to GG Company on January 1, 2016. The terms of the loan
require principal payments of P1,000,000 each year for 5 years plus interest at 8%.
The first principal and interest payment is due on January 1, 2017. GG made the required payments
during 2017 and 2018.
However, during 2018 GG began to experience financial difficulties, requiring NORTHSOUTH Bank to
reassess the collectability of the loan.
On December 31, 2018, NORTHSOUTH Bank has determined that the remaining principal payment will
be collected but the collection of the interest is unlikely. NORTHSOUTH Bank did not accrue the interest
on December 31, 2018.
3. What is the carrying amount of the loan receivable on December 31, 2019
1,925,640