Exercise 11.7 Accounting for loan assets at amortised cost Last Ltd is a manufacturing company that makes loans to other parties from time to time. The loan assets are classified by Last Ltd as subsequently measured at amortised cost. Last Ltd does not apply the simplified approach to impairment of loans receivable. In accounting for impairment losses, Last Ltd classifies all loans as remaining at stage 1 from inception to maturity. On 1 July 2019, Last Ltd made the following loans: A 3-year loan of $1 million to an employee, Mr Whale. The loan is interest free in recognition of his loyalty to the company. Last Led estimates 12-months expected credit loss as $30 000. The implicit interest rate is 10%. Required Prepare the entries of Last Ltd to account for the three loans from initial recognition on 1 July 2019 to derecognition on 30 June 2022, assuming loans are fully paid on maturity. (L014) Paragraph B5.1.1 of AASB 9: ...... Any additional amount lent is an expense or a reduction of income unless it qualifies for recognition as some other type of asset. In this case, the extra amount lent is to reward Mr Whale for his employee loyalty, Amortised Cost of Loan Receivable Interest Interest Amortisation Income Received Closing Balance Period Opening End Balance Jun-20 Jun-21 Jun-22