Please answer with explanation

12. If the note has a nominal interest of 10% and was issued at a market rate of interest of 12%, the note:

a. was issued at market rate of interest.

b. was issued resulting to a discount.

c. was issued resulting to a premium.

d. was a non-interest bearing note

13. How would the interest-bearing note collectible in installment shall be reported in the statement of financial position?

a. the entire carrying value is always reported as non-current asset.

b. the carrying value maybe reported as partly current and partly non-current.

c. the entire carrying value is always reported as current asset.

d. the carrying value is not reported in the statement of financial position.

14. The total interest on a non-interest-bearing note is equal to?

a. The excess of the face value over the present value

b. The excess of the present value of over the face value

c. The excess of the market value over the present value

d. Zero

15. Ding Belle Inc. received a three-year, non-interest-bearing note for P50,000 on January 1, 2020. The current interest rate at that time was 15% for similar notes. Ding Belle recorded the receipt of the note as follows:

Notes Receivable 50,000

Sales 50,000

The effect of this accounting for note receivable on Ding Belle's profit for the years 2020, 2021 and 2022 and its retained earnings at the end of 2022, respectively shall be

A. overstate, overstate, understate, no effect

B. overstate, understate, understate, understate

C. overstate, understate, understate, no effect

D. no effect on any of these

16. The proceeds on discounting notes receivable is:

a. Reduced by the amount of interest up to maturity value.

b. Reduced by the amount of discount

c. Increased by the total interest earned by the company

d. Increased by any protest fee

17. Statement 1: When a notes receivable is discounted on a with recourse basis, the transaction is treated as borrowing.

Statement 2: The amount of finance charge (interest expense) recognized on a discounting of notes receivable is always equals to the amount of discount.

A. Only statement 1 is true

B. Only statement 2 is true

C. Both statements are true

D. Both statements are false

18. Which of the following is deducted from the principal loan amount when a loan was made to arrive at its initial amortized cost?

a. direct origination costs.

b. direct origination fees.

c. discount on loan receivable.

d. premium on loan receivable.

19. Statement 1: The loan after the effect of direct origination costs and fees shall have a new effective interest.

Statement 2: The loan receivable shall be amortized using the original nominal interest.

a. only statement 1 is true

b. only statement 2 is true

c. both statements are true

d. both statements are false

20. Which of the following indicator should be present to shift the expected credit loss from stage 1 to stage 2?

a. an increase in credit risk.

b. a significant increase in credit risk.

c. an objective evidence of impairment.

d. financial difficulties of the borrower.

21. Where there is an objective evidence of impairment, the amount of interest income should be?

a. computed based on the gross carrying value of the loan.

b. computed based on the net carrying value of the loan.

c. no interest shall be recognized.

d. no correct answer.

22. When the company assessed the loan on stage 1 expected credit loss:

a. the amount of impairment loss is based on lifetime ECL.

b. the amount of impairment loss is based on lifetime ECL multiplied by the % of default over the life of the loan.

c. No impairment loss shall be recognized.

d. the amount of impairment loss is based on lifetime ECL multiplied by the % of default for the next 12 months.