For each of the following situations use the IFRS revenue-recognition criteria to determine when the interest revenue should be recognized. Explain your reasoning.

a. A lender makes a loan to a borrower with an excellent credit rating. Interest is paid annually and the principal must be paid in full in three years.

b. A lender makes a loan to a borrower. The borrower is now suffering serious financial problems and hasn’t made interest payments for several months. Collection of interest and principal from this borrower is in doubt.