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Awesome Bank granted a loan to a borrower on January 1, 2019. The interest rate on the loan is 10% payable annually starting December 31, 2019. The loan matures in five years on December 31, 2023. Principal amount Direct origination cost Origination fee received from borrower 4,000,000 61,500 350,000 The effective rate on the loan after considering the direct origination cost and origination fee received is 12%. Required:

Awesome Bank granted a loan to a borrower on January 1, 2019. The interest rate on the loan is 10% payable annually starting December 31, 2019. The loan matures in five years on December 31, 2023. Principal amount Direct origination cost Origination fee received from borrower 4,000,000 61,500 350,000 The effective rate on the loan after considering the direct origination cost and origination fee received is 12%. Required:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 7-2 (IFRS) Awesome Bank granted a loan to a borrower on January 1, 2019. The interest rate on the loan is 10% payable annually starting December 31, 2019. The loan matures in five years on December 31, 2023. Principal amount Direct origination cost Origination fee received from borrower 4,000,000 61,500 350,000 The effective rate on the loan after considering the direct origination cost and origination fee received is 12%. Required: 1. Compute the carrying amount of the loan receivable on January 1, 2019. 2. Prepare a table of amortization for the loan receivable. 3. Prepare the journal entries for 2019 and 2020.
Transcribed Image Text:Problem 7-2 (IFRS) Awesome Bank granted a loan to a borrower on January 1, 2019. The interest rate on the loan is 10% payable annually starting December 31, 2019. The loan matures in five years on December 31, 2023. Principal amount Direct origination cost Origination fee received from borrower 4,000,000 61,500 350,000 The effective rate on the loan after considering the direct origination cost and origination fee received is 12%. Required: 1. Compute the carrying amount of the loan receivable on January 1, 2019. 2. Prepare a table of amortization for the loan receivable. 3. Prepare the journal entries for 2019 and 2020.
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