What is the correct interest income

Reference no: EM133612113

Question: In your audit of New Brunswick Inc., loans receivables you have ascertained the following information in one of its outstanding loans receivable balances. Balance per records, 12/31/16 P6,000,000 Interest income 480,000 Your investigation revealed the following information: The loan was originated on January 1, 2016 and shall be collected 3 years later. The company incurred total origination costs amounting to P520,600, P200,000 of which was charged to the debtor. The entry made by New Brunswick was to debit Loans Receivable account at the face value of the security charging an operating expense for the net origination costs incurred. Annual interests on the loan was collected at the end of 2016 and 2017 and were appropriately credited to interest income. The yield rate on the loan when it was originated was 6% while the prevailing effective interest rate on similar loan by the end of 2017 was 9%. What is the correct interest income?

Reference no: EM133612113

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