Reference no: EM133090120

Questions -

Q1. Job Bank granted a loan to a borrower on January 1, 2020. The interest rate on the loan is 11% payable annually starting December 31, 2020. The loan matures in five years on December 31, 2024. The data related to the loan are: principal amount P5,000,000; origination fee received from borrower, P380,000; and direct origination cost incurred, P91,500. The effective rate on the loan after considering the direct cost incurred and origination fee received is 13%. How much is the initial carrying value of the loan on January 1, 2020?

Q2. On January 1, 2020, Psalms Company originated a 10-year, 7%, P4,000,000. The loan carries an annual interest rate of 7% and is repayable at par at the end of year 10. Psalms Company charges a 1.25% (P50,000) non-refundable loan origination fee to the borrower and incurs P100,000 in direct origination costs. The contract specifies that the borrower has the option to pre-pay the instrument at approximately equal to the instrument's amortized cost at each exercise date, and that no penalty will be charged for prepayment. But at the inception of the contract, Psalms expects the borrower not to pre-pay, the amortization period is equal to the instrument's full term and for that reason the effective yield rate is determined at 6.823%. Round off the interest and amortization to the nearest peso. What is the amortized cost of the instrument on December 31, 2021?

Q3. Proverbs Bank granted a 10-year loan to Ecclesiastes Company in the amount of P1,500,000 with the stated rate of 6% on January 1, 2020. Payments are due monthly and are computed to be P16,650. Proverbs Bank incurred P46,000 direct loan origination cost and P12,000 indirect origination cost. In addition, Proverbs Bank charged Ecclesiastes Company a 5% nonrefundable loan origination fee. Round off the interest and amortization to the nearest peso. How much is the net impact to the income statement related to the loan on 2020?