The Nile Group is owed $1,000,000 by Scorpion Enterprises under an 8% note with three years remaining to maturity. The prior year of interest was unpaid. Nile estimates that it is probable that it will only receive amounts equal to a present value of $880,000. The journal entry that O'Hara would make to record this transaction would include an impairment loss of:

Question

Quizplus · Accepted Answer

$\begin{array}{|c|c|c|}
\hline \text { Loss on impairment (plug) } & 200,000 & \
\hline \begin{array}{l}
\text { Accrued Interest Receivable (\$1 } \
\text { million) }(8 \%)
\end{array} & & 80,000 \
\hline \text { Note Receivable }(\$ 1 \text { million }-\$ 880,000) & & 120,000 \
\hline
\end{array}$

The Nile Group Is Owed $1,000,000 by Scorpion Enterprises Under