Professional Documents
Culture Documents
On January 1, 2013, Handsome Co. extended a loan to Beautiful Co. and received a five-year,
12%, P5,000,000 note. The amount extended resulted to a yield rate of 10%. The note calls for
annual interest to be paid every December 31.
Handsome received the 2013, 2014 and 2015 interest on schedule, however, during 2016,
Beautiful had been experiencing financial difficulties. On December 31, 2016, Beautiful was not
able to pay the interest. Handsome recorded the accrued interest for 2016.
Beautiful communicated to Handsome a revised payment scheme due to the recent financial
difficulty the entity had experience. The payment schedule included the following:
Beautiful will not be paying the interest anymore
The principal will be paid in four (4) equal instalments starting December 31, 2018