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What amount of interest income shall be recognized

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Question - On January 1, 2019, G Inc. granted a loan of 5,000,000 to B Company. The principal amount is due after 5 years but interest of 12% will be due annually starting December 31, 2019. Direct origination costs paid by G amounted to 46,200 while the origination costs paid by B amounted to 550,000. The prevailing rate was 15%.

a. What is the initial carrying amount of the loan?

b. How much is the unearned interest income in 2019?

c. What amount of interest income shall be recognized on December 31, 2021?

d. What is the carrying value of the loan on December 31, 2022?

Reference no: EM132994266

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