Question
Old National Bank signed a loan agreement with Lensing Wholesale on January 2, 2018. Lensing is borrowing $1,000,000 for 10 years with a stated interest
Old National Bank signed a loan agreement with Lensing Wholesale on January 2, 2018. Lensing is borrowing $1,000,000 for 10 years with a stated interest rate of 7%. Lensing will make a payment of 142,377.50 at the end of each year. Lensing also paid $20,000 in points to Old National on January 2, 2018.
In connection with the transaction, Old National paid fees to Documentation Processing, Inc. for loan processing. These fees were 0.5% of the loan. Old National also paid a bonus to an employee of 1% of the loan. Finally, Old National paid advertising costs of $3,000 and incurred expenses of $2,000 related to preparation of the loans documents.
Prepare a memo to me explaining the correct accounting treatment for this transaction for Old National Bank. You must provide Codification references to support your answer. You answer should be in the FIRAC format.
Issue(s) (typically a question)
Review of authoritative literature (ASC)
Analysis (link the facts to the authority)
Conclude (answer the issue question)
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