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What is carrying amount of the loan receivable on January

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Reference no: EM132857131

Problem - Weasley Bank granted a loan to a borrower on January 1, 2020. The interest rate on the loan is 10% payable annually starting December 31, 2020. The loan matures in five years on December 31, 2020. The data related to the said loan are:

Principal Amount 8,000,000

Origination fee received from the borrower 1,250,000

Direct origination cost incurred 50,000

The effective rate on the loan after considering the direct organization cost incurred and the origination fee is 15%.

Required -

1. What is the carrying amount of the loan receivable on January 1, 2020?

a. 3,544,000

b. 4,600,000

c. 5,504,000

d. 6,800,000

2. What is the interest income for 2020?

a. 1,709,000

b. 1,907,000

c. 1,020,000

d. 2,000,000

3. What is the carrying amount of the loan receivable on December 31, 2020?

a. 7,020,000

b. 8,000,000

c. 6,200,000

d. 5,100,000

Reference no: EM132857131

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