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What amount of interest income karlos company disclose

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Reference no: EM132943379

Question - On January 2, 2024, Karlos Company originates 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, 2029. Karlos Company charges a 1.25% (P50,000) non-refundable loan origination fee to the borrower and also incurs P100,000 in direct origination costs. The contract specifies that the borrower has an option to pre-pay the instrument at approximately equal to instrument's amortized cost at each exercise date, and that no penalty will be charged for pre-payment. But at the inception of the contract, Karlos 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 6.6823%.

1) What is the amortized cost of the instrument on December 31, 2025?

2) What amount of interest income should Karlos Company disclose in its December 31, 2024 statement of comprehensive income?

Reference no: EM132943379

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