Question
SiomaiShingSiomaiSha Bank granted a loan to a borrower on January 1, 2019. The interest on the loan is 10% payable annually starting December 31, 2019.
SiomaiShingSiomaiSha Bank granted a loan to a borrower on January 1, 2019. The interest on the loan is 10% payable annually starting December 31, 2019. The loan matures in three years on December 31, 2021.
| Principal amount | 4,000,000 |
| Origination fee charged against the borrower | 342,100 |
| Direct origination cost incurred | 150,000 |
After considering the origination fee charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 12%.
What is the carrying amount of the loan receivable on January 1, 2019?
What amount should be recognized as interest income for 2019?
What is the carrying amount of the loan receivable on December 31, 2019?
What amount should be recognized as interest income for 2020?
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Management And Cost Accounting Students Manual
Authors: Colin Drury
6th Edition
184480030X, 978-1844800308
