Philippine Bank granted a loan to a borrower on January 1, 2017. The interest on the loan is 8% payable anually starting December 31, 2017. The loan matures in three years on December 31, 2019. Principal amount3,000,000 Origination fee charged against the borrower100,000 Direct origination cost incurred260,300 After considering the origination fee charged to the borrower and the direct origination cost incurred, the effective rate on the loan is 6%. 3. What is the carrying amount of the loan receivable on December 31, 2017? a. 3,000,000 b. 3,160,300 c. 3,109,918 d. 3,210,682 4. What is the interest income for 2018? a. 240,000 b. 180,000 c. 248,793 d. 186,595

The following calculations are done for Philippine Bank.

Answered: Philippine Bank granted a loan to a…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

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Philippine Bank granted a loan to a borrower on January 1, 2017. The interest on the loan is
8% payable anually starting December 31, 2017. The loan matures in three years on December 31, 2019.

	Principal amount	3,000,000
	Origination fee charged against the borrower	100,000
	Direct origination cost incurred	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%.

3. What is the carrying amount of the loan receivable on December 31, 2017?
	a. 3,000,000
	b. 3,160,300
	c. 3,109,918
	d. 3,210,682

4. What is the interest income for 2018?
	a. 240,000
	b. 180,000
	c. 248,793
	d. 186,595

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