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Impairment of zero-interest notes receivable, GAAP vs. IFRS On December 31, 2020, Firth Company borrowed $62,092...

Impairment of zero-interest notes receivable, GAAP vs. IFRS

On December 31, 2020, Firth Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest note. The note was issued to yield 10% interest. Unfortunately, during 2022, Firth began to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would collect only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%.

1,Instructions: On March 31, 2023, Paris learns that Firth will be able to repay the loan under the original terms. Paris Bank uses IFRS. Prepare the journal entry to be recorded on March 31, 2023, if any.

2,Prepare the journal entry to record the note impairment. (NOT SURE IS THAT RIGHT)?

12/31/2022

Loss on Impairment of Notes Receivable

18,782

   Allowance For Notes Receivable

18,782
Business   Accounting   
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Answer #1

Step 1 : Make amortization schedule ( To understand the Carrying Amount before impairment )

Step 2 : Calculate the Imapairment Loss

Step 3 : Record the Journal entry of Impairment Loss

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