Universe Bank provided an 8% loan of $1,000,000 on January 1, 2019. The $80,000 interest is due at the end of each year, with the principal due at the end of five years. Because the borrower is having financial problems, the first year's interest of $80,000 has not yet been collected as of the end of 2019.

The borrower negotiated a loan restructure. The payment of all interest for the first five years will be postponed until the end of the loan period. Furthermore, the principal repayment amount will be reduced from $1,000,000 to $500,000. The PV of 1 at 8% for four periods is 0.7350. In 2019, no interest income was recorded in connection with the loan.

What is the loan impairment loss for the year ending December 31, 2019?



2. Galaxy Corporation sold a special piece of equipment with a list price of $900,000 on January 1, 2019. The buyer paid $100,000 in cash and agreed to sign a $800,000 note. The note said that it will be paid down in four equal yearly payments of $274,565 beginning December 31, 2019. (Hint: 14% ) On December 31, 2021, what is the carrying amount of the note receivable?



3. Fren Co. borrowed $5,000,000 from Mani Bank for a 10-year loan at a 6-percent interest rate. Payments are payable on a monthly basis, amounting to $55,500. Mani Bank incurs direct loan origination costs of $250,000 and indirect loan origination costs of $50,000. In addition, Fren Co. is charged a 7-point nonrefundable loan origination fee by Mani Bank.

What is the carrying amount of the lender, Mani Bank?



4. Morning Co. purchased a $2,000,000, 8%, five-year note from Evening Corporation, which required five equal yearly year-end payments of $500,900. The note was discounted to yield 9% rate to Morning Co. Then, Morning Co. recorded the note at a current value of $1,948,500 on the day of purchase. What is Morning Co.'s total interest revenue over the life of this note?



5. Beta Corp. has a $4,000,000 note receivable from the sale of land with an interest rate of 11% per year. The note was written on April 1, 2018. Every April 1, the note is payable in four yearly installments of $1,000,000 plus interest on the outstanding amount. On April 1, 2019, the first principal and interest payment was made. What is the interest income for 2019?