Problem 7-8 (IFRS) to a On January 1, 2021, Global Bank loaned P3,000,000. 6-year borrower. The contract specified that the loan had a term and a 9% interest rate. Interest is collected for 2021. has a 12-month probability of default of 2% and expected t collect only 90% of the loan. On December 31, 2022, the bank determined that there is significant increase in the credit risk of the loan but ne objective evidence of impairment. Based on relevant information, the bank concluded that there is a 30% probability of default over the remaining term of the loan and it is expected that only 60% of the loan will be collected. Interest is collected for 2022. On December 31, 2023, the borrower was under financial difficulty and the loan was considered impaired. The bank agreed that only 40% of the principal will be collected on due date. Interest is collected for 2023. The present value of 1 at 9% is 0.65 for 5 periods, 0.71 for four periods and 0.77 for three periods. Required: 1. Prepare the journal entries for 2021, 2022 and 2023. 2. Compute the carrying amount of the loan receivable on December 31, 2021, 2022 and 2023. 3. Prepare the journal entries for 2024, 2025 and 2026.

Problem 7-8 (IFRS) to a On January 1, 2021, Global Bank loaned P3,000,000. 6-year borrower. The contract specified that the loan had a term and a 9% interest rate. Interest is collected for 2021. has a 12-month probability of default of 2% and expected t collect only 90% of the loan. On December 31, 2022, the bank determined that there is significant increase in the credit risk of the loan but ne objective evidence of impairment. Based on relevant information, the bank concluded that there is a 30% probability of default over the remaining term of the loan and it is expected that only 60% of the loan will be collected. Interest is collected for 2022. On December 31, 2023, the borrower was under financial difficulty and the loan was considered impaired. The bank agreed that only 40% of the principal will be collected on due date. Interest is collected for 2023. The present value of 1 at 9% is 0.65 for 5 periods, 0.71 for four periods and 0.77 for three periods. Required: 1. Prepare the journal entries for 2021, 2022 and 2023. 2. Compute the carrying amount of the loan receivable on December 31, 2021, 2022 and 2023. 3. Prepare the journal entries for 2024, 2025 and 2026.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 11E

See similar textbooks

Similar questions

A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an annual interest rate of 11%. If 6 months have passed since note establishment, what would be the recorded interest figure at that time? A. $7,150 B. $65,000 C. $14,300 D. $2,383
Chemical Enterprises issues a note in the amount of $156,000 to a customer on January 1, 2018. Terms of the note show a maturity date of 36 months, and an annual interest rate of 8%. What is the accumulated interest entry if 9 months have passed since note establishment?
Jain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual interest rate of 3.5%, due in 6 months. What journal entry is created when Jain honors the note?
On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)
Everglades Consultants takes out a loan in the amount of $375,000 on April 1. The terms of the loan include a repayment of principal in eight, equal installments, paid annually from the April 1 date. The annual interest rate on the loan is 5%, recognized on December 31. (Round answers to the nearest cent, if needed.) A. Compute the interest recognized as of December 31 in year 1. B. Compute the principal due in year 1.
Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the end of four months? A. $2,600 B. $7,800 C. $137,800 D. $132,600
National Bank granted a loan to borrower on January 1, 2021. The interest on the loan is 10% payable annually starting December 31, 2021. The loan matures in thee years on December 21, 2023. Principal amount 4,000,000Origination fee charges against the borrower 342,100Direct Origination Cost incurred 150,000 What is the carrying amount of the loan receivable on January 1, 2021? a. 4,000,000b. 3,807,900c. 4,150,000d. 3,657,900
What is the interest income for 2021? Philippine Bank granted a loan to a borrower on January 1, 2021. The interest on the loan is 8% payable annually starting December 31, 2023. Principal amount Origination fee charged against the borrower Direct origination cost incurred 3,000,000 100,000 260,300 After considering the origination fee charged to the borrower and the direct origination cost incurred, the effective rate on the loan is 6%. a. 240,000 O b. 189,618 c. 252,824 O d. 180,000
Mermaid Bank granted a loan to a borrower on January 1, 2020. The interest on the loan is 12% payable annually starting December 31, 2020. the loan matures in three years on December 31, 2022. Principal amount 4,000,000 Direct origination cost incurred 80,000 Indirect origination cost incurred 40,000 Origination fee received from the borrower 310,000 a. Compute for the carrying amount of the loan receivable on January 1, 2020. b. Interest income for 2020 c. Carrying amount of the loan receivable on December 31, 2020.
What is the carrying amount of the loan receivable on January 1, 2021? Appari Bank granted a loan to a borrower on January 1, 2021. The interest rate on the loan is 10% payable annually starting December 31, 2021. The loan matures in five years on December 31, 2025. Principal amount Origination fee received from borrower Direct origination cost incurred 4,000,000 350,000 61,500 The effective rate on the loan after considering the direct origination cost incurred and origination fe received is 12%. a. 4,000,000 O b. 4,650,000 O c. 4,411,500 O d. 3,711,500
All In Digital Bank granted a loan to a client on January 1, 2022. The interest on the loan is 10% payable annually starting December 31, 2022. The loan matures in three years on December 31, 2024. Pertinent information on the loan is provided below: Principal amount, P 1,000,000 Origination fee received from the borrower, P 55,200 Direct origination cost paid, P 30,770 Indirect origination cost paid, P 5,000 After considering the origination fee received from the borrower and the direct origination cost incurred, the effective rate on the loan is 11%. At what amount shall the loan be initially measured on January 1, 2022?
All In Digital Bank granted a loan to a client on January 1, 2022. The interest on the loan is 10% payable annually starting December 31, 2022. The loan matures in three years on December 31, 2024. Pertinent information on the loan is provided below: Principal amount, P 1,000,000 Origination fee received from the borrower, P 55,200 Direct origination cost paid, P 30,770 Indirect origination cost paid, P 5,000 After considering the origination fee received from the borrower and the direct origination cost incurred, the effective rate on the loan is 11%. What is the carrying value of the loan receivable on December 31, 2023 in Megabank's accounting books?