Reference no: EM133007177

PROBLEM 1 - On December 1, 2020, Fanny Co. gave Estes Corp. a P400,000, 12% loan. Estes Received proceeds of P388,000 after the deduction of a P12,000 nonrefundable loan origination fee. Principal and interest are due in 60 monthly installments of P8,900, beginning January 1, 2021. The repayments yield an effective interest rate of 12% at a present value of P400,000 and 13.4% at a present value of P388,000.

1. What amount of accrued interest receivable should Fanny include in its December 31, 2020 statement of financial position?

2. How much is the carrying amount of the loan receivable on December 31, 2020? (Round-off computations to the nearest peso)

PROBLEM 2 - Selena, Inc. borrowed from Karina Bank under a 10 year loan in the amount of P300,000 with a stated interest rate of 6%. Payments are due monthly, and computed to be P3,330. Karina Bank incurs P8,000 of direct loan origination cost and P4,000 of indirect loan origination costs. In addition, Karina Bank charges Selena, Inc. 4% nonrefundable loan origination fee. At what amount should the loan receivable be initially recognized by Karina Bank?

PROBLEM 3 - On December 1, 2020, Thamuz Co. Gave Harith Co. a P400,000, 11% loan. Thamuz paid proceeds of P388,000 after the deduction of a P12,000 nonrefundable loan origination fee. Principal and interest are due in 60 monthly installments of P8,620, beginning January 1, 2021. The repayments yield an effective interest rate of 11% at a present value of P400,000 and 12.4% at a present value of P388,000. What amount of income from this loan should Thamuz report in its 2020 income statement? (round-off computations to the nearest peso)

PROBLEM 4 - On January 1, 2020, Atlas Bank entered a 12%, P2,000,000 loan to Angela, Inc. Principal is due on January 1, 2024, but interests are due annually every January 1. Atlas incurred direct origination costs of P176,788 and indirect origination costs of P36,000. In addition, Atlas charged Angela a 2.5% nonrefundable origination fee. The effective rate is 13.84%. How much is the interest income in 2021? (Round-off computations and final answer to the nearest peso)

PROBLEM 5 - On January 1, 2021, Bane Bank extended a P1,800,000 loan to Faramis, Inc. Principal is due on December 31, 2025, but 12% interest is due annually starting December 31, 2021.

On December 31, 2023, Faramis Inc. was delinquent and it was ascertained that the loan is impaired. Bane bank assessed that interest accruing on the loan will not be collected; however, the principal is expected to be received in three equal annual installments starting on December 31, 2024. The current market rate on December 31, 2023, is 14%. (Round-off PV factors to 3 decimal places)

1. How much is the balance of allowance for impairment loss on December 31, 2023, immediately after impairment testing?

2. How much is the interest income in 2024?