Answered: What is the carrying amount of the loan…

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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Question

On January 1, 2021, a borrower was granted a loan by Qatar Bank. The loan interest is payable annually starting December 31, 2021 at an interest rate of 10%. The loan matures in five years on December 31, 2025.

The principal amount of the loan is P4,000,000. The borrower was charged with origination fees in the amount of 350,000. The bank incurred P61,500 origination cost.

What is the carrying amount of the loan receivable on December 31, 2021?

a. 4,243,120

b. 4,000,000

c. 3,756,880

d.3,600,000

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