PROBLEM 1On December 31, 2023, JFG Company, a financing institution, lentP4,000,000 to MFG Company due 3 years after. The loan issupported by an 8% note receivable. Transaction costs incurred tooriginate the loan amounted to P248,000. P374,000 waschargeable to MFG as origination fees. Interest on the loan iscollectible at the end of each year. The yield rate on the loan afterconsidering the direct origination fees and origination costs incurredis 9.25%.JFG was able to collect interest as it became due at the end of2024. During 2025, however, due to MFG Company's businessdeterioration and due to political instability and faltering globaleconomy, the company was not able to collect amounts due at theend of 2025. After reviewing all available evidence at December 31,2025, JFG determined that it was probable that MFG would payback only P3,400,000 collectible as follows:December 31, 2027December 31, 2028December 31, 2029December 31, 2030P1,400,0001,000,000600,000400,000As of December 31, 2025, the prevailing rate of interest for all debtinstruments is 14%. Moreover, JFG Company accrued the intereston December 31, 2025.Based on the above and the result of your audit, answer thefollowing: (Round off PV factors to 4 decimal places)1. What is the carrying amount of the loan receivable as ofDecember 31, 2024?2. What is the loan impairment loss to be recognized in the 2025statement of comprehensive income?3. What is the interest income to be recognized in the 2027statement of comprehensive income?4. What is the carrying amount of the loan receivable as ofDecember 31, 2027?

Impairment Loss-:An Impairment Loss is a prominent reduction in the carrying amount of an investment…

On December 31, 2023, JFG Company, a financing institution, lent P4,000,000 to MFG Company due 3 years after. The loan is supported by an 8% note receivable. Transaction costs incurred to originate the loan amounted to P248,000. P374,000 was chargeable to MFG as origination fees. Interest on the loan is collectible at the end of each year. The yield rate on the loan after considering the direct origination fees and origination costs incurred

On December 31, 2023, JFG Company, a financing institution, lent P4,000,000 to MFG Company due 3 years after. The loan is supported by an 8% note receivable. Transaction costs incurred to originate the loan amounted to P248,000. P374,000 was chargeable to MFG as origination fees. Interest on the loan is collectible at the end of each year. The yield rate on the loan after considering the direct origination fees and origination costs incurred

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Latvia Limited made a loan to Lithuania Incorporated in exchange for a $250,000 note on July 1, 2021.This note is for a period of seven years, with interest at 4% quarterly. Assume the market rate forcomparable loans is 8%. Prepare the journal entry in good form for Latvia Limited’s books
On January 1, 2020, Apple, gave a loan to Samsung Nokia Inc. amounting to P1,000,000 and received a two-year 12%, 1, 000 note. The note calls for annual interest to be paid each January 2. Apple collected the interest payment in 2021 as scheduled. The company incurred origination cost amounting to P57,851, 40% of which had been charged to Samsung Nokia Inc. The yield rate on the loan is arranged at 10%. On December 31, 2021, however, based on the changing market conditions and Samsung Nokia Inc.'s financial struggles, only P900,000 is expected to be collected by Apple. The P900,000 principal amount is expected to be collected on December 31, 2020, 2021, and 2022. By December 2021, Apple assessed that the market's time value for money is computed at 8%. How much loss should be recognized in relation to the loan on December 31, 2021? Use 9 decimal places for the present value factors. Kindly show your solution.
LINDT Corporation manufactures and sells electrical generators. On May 31, 2020, it sold an electrical generator costing ₱ 700,000 for ₱ 1,000,000. The buyer paid ₱100,000 down and signed a ₱ 900,000 non-interest bearing note payable in three equal installments starting May 31, 2021. Assume the prevailing interest rate for a note of this type is 12%. The present value of an ordinary annuity of 1 for three periods is 2.4018. How much is the Interest income for the year ending December 31, 2021?
Mewto Bank granted a loan to Mew Company on January 1, 2020. The interest on the loan is 12% payable annually starting December 31, 2020. The loan matures in four years. Principal amount P5,000,000 Direct origination cost incurred 120,000 Indirect origination cost incurred 50,000 Origination fee received from the borrower 400,000 After considering the origination fee received from the borrower and the direct origination cost incurred, the effective rate on the loan is 14%. How much is the interest income to be recognized on December 31, 2021?
On April 2009, Entity A granted Entity Z a 4 year loan amounting to 5,000,000 of direct loan origination cost and receives nonrefundable origination fees amounting to 500,000. the stated interest is 10% payable annually every december 31. What is the interest income and carrying amount of the loans receivable on March 31, 2010?
Jem Riane Delos Reyes Bank granted a loan of P3,000,000 to a borrower on January 1, 2021. The terms of the loan were payment in full on December 31, 2026 plus annual interest payment at 8% every December 31. The first interest payment was made on December 31, 2021. However, on December 31, 2021, due to financial difficulties, the borrower informed Freetown Bank that it would probably miss the interest payments for the next two years. After that, the borrower expects to resume the annual interest payment but the principal would be paid on December 31, 2027 or one year late with interest paid for that additional year. Accordingly, the payments from the borrower are scheduled as follows: Date of Flow Cash Flow Amount 12/31/2022 No interest payment Nil 12/31/2023 No interest payment Nil 12/31/2024 Interest payment 12/31/2025 Interest payment 12/31/2026 Interest payment 12/31/2027 Interest payment P 240,000 240,000 240,000 240,000 3,000,000 Principal payment 34. The carrying amount of the…
Magnolia Corp. granted a loan to a borrower on January 1, 2023. The interest on the loan is 12% payable annually starting December 31, 2023. The loan matures in three years on December 31, 2025. Data related to the loan are: Principal amount10,000,000Origination fees charged against the borrower470,560Direct origination cost incurred235,000 1. The carrying amount of the loan as of January 1, 2023 is A. 9,529,440 B. 9,764,440 C. 10,235,000 D. 10,235,560 2. The carrying amount of the loan as of December 31, 2023 is A. 9,833,817 B. 9,912,213 C. 10,000,00 D. 10,235,560 3. The current portion of the note on December 31, 2023 is A. Nil B. 78,396 C. 9,833,817 D. 9,912,213 4. The noncurrent portion of the note on December 31, 2023 is A. Nil B. 9,833,817 C. 9,912,213 D. 10,000,000
What is he initial carrying value of the loans receivable as of Dec 31, 2019?
Acc
LINDT Corporation manufactures and sells electrical generators. On May 31, 2020, it sold an electrical generator costing ₱ 700,000 for ₱ 1,000,000. The buyer paid ₱100,000 down and signed a ₱ 900,000 non-interest bearing note payable in three equal installments starting May 31, 2021. Assume the prevailing interest rate for a note of this type is 12%. The present value of an ordinary annuity of 1 for three periods is 2.4018. How much is the Unearned interest income on May 31,2020?
Magic Finance Company reports a loan receivable from Blue Company in the amount of P5,000,000. The initial loan's repayments include a 10% interest rate plus annual principal payment of P1,000,000 on January 1 of each year. The loan was made on January 1, 2022. Blue made the P500,000 interest payments for 2022 but did not make the P1,000,000 principal payment nor the P500,000 interest payment in 2023. Blue is having financial difficulty and Magic has concluded that the loan is impaired. Analysis of Blue's financial condition on - December 31, 2023 indicates that the principal and interest currently due can be collected but it is probable that no further interest can be collected. The probable amounts and timing of collection are determined as follows: December 31, 2024 - P1,750,000December 31, 2025 - 2,000,000December 31, 2026 - 1,750,000Total P5,500,000 The preset value factors at 10% are as follows: 1 period - 0.09; 2…
On January 1, 2020, Sukuna Bank loaned 4,000,000 to Satori Company. The interest of the loan is 7% payable at every year-end within the next 2 years. The effective rate on the loan is 9%. Data related to the loan: Direct Origination cost 450,000 Origination fees (275,000) Determine the initial carrying amount of the loan.