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Omega Finance granted a 10%, 2-year P5,000,000 loan to Duchess Company onJanuary 1, 2017. The...

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Accounting

Omega Finance granted a 10%, 2-year P5,000,000 loan to Duchess Company onJanuary 1, 2017. The interest is payable every December 31 for each year during the term of the contract. Omega Finance incurred an origination cost of P328,326 but charge Duchess Company P150,000 as origination fee.The effective rate is now 8% after considering the origination costs and origination fee. After paying the interest that is due on December 31,2017, Duchess Company informed Omega Finance about their financial difficulty. Omega Finance has now considered that the loan to DuchessCompany is now impaired. Reliable estimate shows that the projected cashflows from the loan are as follows: P2,000,000 on December 31, 2018 andP3,000,000 on December 31, 2019.What amount of impairment loss on the loan should Omega Finance recognizeon December 31, 2017?a. None c. P462,963b.P373,371d. P668,723

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