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pROl1IJEMS
Problen
7- 1 (I FRS)
N:~sty Bnnk
gr nnLod
ri l(mn t1) :,. h,
>n•r>•,.
1
i
I
, , ., , i 'n
,, :1 , , r, f''/ J
II ~
Th e 1ntc
rf'Ht on t
1e Joan iJ1 l
<J',% p:;v :
1
J J,, I ~
1
, , //.~
b
'3 I •)() 2 1
'J"'h ' " j ,){)IJI J~ )'j ~·~ 1• ,, y
l) p CC m C r.
I ~ • C JO n n m n t I. ' r w 1 A, ,
rl ,I u -r.
Decembe r :n , :l02:i ,
Ht ,l,f < ;,<., 'l'~hf~ '/ / ,
Prin cip a l
amount
Di
rect origina tion
cosL in.curr ,~d
Origination fe
e received from th~ bor r<,w,:r
1/ 11 ,///J
~ f/J,</ / 1
;½~,;, 1 ,
After considering
_the
orig.inati()n
fr: ,; r <:(;,~i w:
<J f r.-)rr, t ;J~
borrower
and th ~ direct origination ().-OHt in c•;rr,~(j, t};,; ~ ff,~,~!''✓,(;,
rate
on th e loan
1s 12%.
Required:
Prepare
journal entries
for 2021,
2022 :ind 202 :1_
Problem 7-2 (IFRS)
Awesome
Bank
granted a
loan to a bor
row€r on ~J:;
nu hty l ,
The int eres t rate on the
loan i,, 10%
pay ab l~ annu &L(i
starting Decemb er 3 1, 2021. The loan matur,3, in fiw: :r~ar~)
OR Decemb
e r 31,
Principalamount
Direct origination co s t
Origination fee received from
bc)rrow er
4/){ftJ
<~.h
~;1 :-,I~
~~ro <11J
The effective rate
on t he loan
after conBi
d~nn g th<; d
rsr t
originati on
cos t and origin ab<Jn fc<~
n:(; 0 1vcd Jij
12'0',
Required:
- Comp ut e the earry in ~
am<Junt
()f th 0 1 CJf3n r oc ~ivable: ,;n
clanuary
1, 202 l.
2. Prepare
a tabJ<:
of' am<1rt Jzuti on
f( ,r the~
1,o;Jn rt;cr:ivahl~
3. Prepare th
e jour n o J ,!
nt rJc:h for 20~
Hnd 2022.
2J
j - '
I
Ir
I
I
, r
Problen
7-3 (JFRS)
wer on January 1
borro
,
loan to a ble annually starting
Pauper Bank granted a
1
an is 8% J)aya ·n three years on
9091 Th e
1·nterest
on the
O
rnatures
1
= ... ·
h loan
December
T e
·
December 31, 2023.
Principal
amount
. d
3,000, 000
260,
100,
Direct origination cost
incur_ re h borrower
Origination
fee charged
again
st
t e
·
. c barged tothe borrower .. tion iee c
f'C.
After considering
the ongina
. rred
the
e 1ective
rate
.
.. • ost 1ncu
,
and the direct ong1nat10n c
. .
on the loan is 6%.
Required:
. · £
2
021 2022 and
Prepare journal entries or ,
·- _
.· D
. b r 31 2021.
Present the loan receivable on ecem ~ ,.
Pr_oblem 7-4 (IFRS)
On January 1, 2021, Empress
Bank granted
borrower.
The interest on the loan is 10% payable annually on
December 31, 202- .. The loan ma ture ~s in three years on
December 31,
Principal
amount
Direct origination cost incurred
Origination
fee charged against
the borrnwer
5,000,
457,
200,
After considering
the origination
foe cha •a d. · t th
b
. , d h di
.. ..
1 oe aga1ns , e 01 rowe an t e rect orio 01
nation CC>"'t·
.
" 1ncurre
t 1e e
ect1ve
rate on the loan 1s 8%.
' ,
Required:
l , Determine
the carrying amo t
,
un of the loan on Janual'y
~- Pr e par e a tQb]e of
amortization of
t tle
co.st.
1
direct
origination
Pr e pa r e journa l e ntri es for 1)
0
,,
2022 and
220
P r obl e m 7-6 (IAA)
Coz y Ban k loa ned a botrowcr P7 ,500,000 o n ,J anu !lry l , 202 )
The ter ms of the Joa n were paym ent In funon r,> ece m b,,r :i I,
2 025, pl uR an nu a l inte r es t pay me n t a t
¾ be rs in ninp
December 3 1, 2021. ,
The in tere st payme nt was made aA sche dul e d on Dece mb q
3 1, 2021. Howeve r, due to fi n a ncial se tb ac ks , t he ho r r ow iir
was una bl e to make the Dec ember 31, 2022 i nt e r es t p ay ment
I,,
T he bank considered the Joan imp ai r ed a nd pro ject ed the
cash fl ows fr om the loan on Dece mb er 3 1, 2022. The ba ni,
a,c c rr1, ed the 1 ,nt,erest on De ceniber 31, 2022.
Projected cash flows
Date of cash flow
De cember 31, 2023
December 31, 2024
December 31, 2025
December 31, 2026
Present value of 1 at 12%
For one period
For two periods
For three periods
F or fotir periods
Required:
Amount proje cted
on December 31 , 2022
1. Compute the presen
December 31, 2022. t value of the
loan receiv a ble on
2. Compute the im.
pa1rment los
s on the I
3. Prepare jou rnal ent. oan receivable.
ri es for 2022
' 2023 a nd 20 24.
probl e m 7- (IAA)
On Dece
mber 31, 2021, Durable Bank has a loan receivable
of P ,000, 000 from a borrower that it is carrying at face
nmount and is due on December 31, 2026.
Tnterest on the loan is payable at 9% each December
The borrowe1~ paid the interest due on December
but informed the bank that it would probably miss ~J}.ext
two years' interest payments because of financial diffjculty.
After that, the borrower is expected to resume the annual
interest payment but it would make the principal payment
one year late, with interest paid for that additional year at
the time of principal payment.
Present value of 1 at 9%
One period
Two periods
Three periods
Four periods ,
Five periods
Six periods
Required: ,,
.
~
. ;
\ ~~ '
- Compute the present value of the loan receivable on
December 31, 2021.
Compute the impairment loss to be recognized -on.
December 31, 20121'.
- Prepare journal entries from 2021 to 202
7
·
problem 7-
(IFRS)
Modera
te B.a nk
grant
ed a loa n
to _a
borrower
onJa
nu ary
l ,
2
02 1.
The in te
rest
on th
e loan
ts 10% pa y
ab
]e annu
alJy
st
artingDece
mb
er3 1, 2021. Th e loan
m
atur es
inthree
year
8
011
December 3 1, 2023.
Principal amou
nt
Direct
originat
io n cost
incurred
Indirect
origin
ation cost i
ncurred
Ori
gination
fee received
from
th e borr
ow er
After
consi
dering
the ori
ginati on
fee
re ce ived
fro m th e
borrow er
and
the
, direct
originat
ion
cost inc
urred
, t he
effecti ve
r ate on
the loan
is 12%.
What
is the
carrying
amount
ofth
e loan
receivable
on
January
1, 2021?
a. 4, 76
b.
C. 4,
81 0, 000
d. 4,660,
2. Wha t a mo
unt
s hould
be reported
a s int
erest income for
2021
?
a. 571,
b. 500,
C.
476,
d.
What
is t he ca
rryi n g
amou
nt of
th e lo an
receiva ble
on
Dec em
ber
31, 202
1?
a. 5,
000,
0
b.
C.
d.
4,9 10 ,
dapted)
(AICPA
A n
to Abbo Com
pa ni'.
Problem7-lO
d IO-year
1
;~ed interest
rate of
6~
. 1 Bank grante
oOO with a s
~mputed to
be P IS ,65(}
Nat10na
f Pl
500, and
are
.. ·
the amount o
du~ monthly
f direct
loan o ngin~t
ion
Payments are
. red
p40,000?.
ationcost. In ad
dition,
National
Bant(}~fi~direct
lot bfo~ompan
y a
4- point
cost ~ndJ2%~nk
cha
_r~e:tion fee.
Natiof dable loan
origin
.. amount
of t h e
loan
nonre un
. 1 carrying
al B k?
1
What is the
init1a t of Nation
an.
. receivable
on the par
a 1440,
~b: 1:480,
c.
d.
1,520,
.
nt of the loan
payable
2 What is
the initial carrymg
a~ou
. on the part of Abbo Company.
·""-- a.
b. 1,480,
C. 1,500,
d. 1,520,
Problem
7-11 (AICPA
Adapted)
On December
1,2021, Nicole
Company gave
D~wn Comp
any
a P2,000,000,
12% loan. Nicole Company
paid pr oceeds
of
Pl,940,000 after the deduction of a
P60, 000
nonrefun da
ble
loan origination fee.
Principal and interest are due in sixty
monthly
i nstallmen
ts
of P44,500, beginning January
1,2022.
The repayments
yield
an effective
interest rate
of 12% at
a present val
ue of
P2,000,000 and
13.4% at
a present value
ofPl,940,000.
1. What amount
of interest income
should be rePorted
in 2021
9
a. 22,
b. 19,
--c. 21,
d. 20,
- What
amount should
be r
t
receivable on
Deceniber
3
e
P
0
2
rted as accrued
interes
a. 44,
, 021?
·
b. 60,
d.
Problem
7- (IAA)
borrower
on Janua
ry l
0 000 to
a
f
ll D
'
World Bank loaned
P9 , ' were payment
in ~ ec: m ~er
The terms of the
~oa~rest
payment
at 121/o
beg innin 31 g 2025 ,
plus annual
int
D
' b 31
ecem er
,
h duled on Dece
ade mb e as sc e
r
The interest
payment was
cial setbacks
, the borr o wer 31
However, due to
n~~r
3
1 2022 interest
pa yme nt.
w~s
unable to make the
Decem
'
.
· m aired
and proJec
ted the
The bank considered
th
e loan
1
ter 31
The ban k h as
cash flows from the loan on Decem
2022
accrued.
the interest
on December
31
,
·
Amount
projecte
d
Date of cash flow
Dece1nber
31, 2023
December
31, 2024
December
31, 2025
December
31, 2026
on December
31, 20
22
The present
value of
1 at 12% is . for on e period
,. two periods,. for
71 for three periods,
and
. 64 for four per i od s.
l.
What amount
should
be reported
as loan impairmen
t lo ss
for 2022?
a. 2,370,
· "1). 3,450,
C.
QQQ
d. 2,450,
What
amount
should
be repo
t d
·
2023?
. ,
. r e as interest
incom
e fo r
.a. 795,
b.
900,
C.
180,QQQ
d.
0
- What is the carrying
amount
December
31, 2023?
of the loan receivable
on
a. 5,925,
b.
4,845,
c.
6,330,
d. 7,500,
228
problem
(IAA)
0
. Decem ber
3
- 2021
,Oregon
Bank
recorded
.
o/rs
. 000
,
_in a
loan
granted
to a
client.
an lDVestment
The
loan
has. a
10%
effecti~e
0ter~st
rate
payable
annually
·eiT
Dece m b
er 31.
The
pnnc1pal
1s
due
in full
at
t
. -
e,
.
ma
untv
on
Dece
mber
31 , 2024.
.,
Un
fort
un~t
ely,
the
bor~ower
is _
experiencing
significant
financi
al difficul
ty
and "-ill
have
difficult
time
in
making
full
pa yme
nt.
The ba11k
projected
that
the
entire
principal
will
be
paid
a t
maturi
ty
and
-1% interest
or
P
, 000
will
be
paid
annuallv
0
11
Dec
ember
31
ofthe
next
three
years.
There
is
no accrued
inter
est
on
December
31
, 2021.
The
present
value
of
1 a t 10%
for thre
e
p eriods
is 0.75.
and
t he
presen
tvalue
ofan
ordin
ary
annui
ty
of 1
at10% for
three
periods
is 2.49.
\rhat
amount
should
be r e
ported
a s
impairmen
t loss
for
2021?
a.
752
,
b.
600,
C.
250,
d. 748,
\1/hat
amount
should
be reported
as
interest
in come
for
2022?
a.
200,
b. 424
, 800
C.
224,
d.
500,
3
n
h
l
an re
cei,·able
on
· dhat
is
the
carrying
amount
oft
e
0
December
a.
5,000,
b.
3,750,
C. 4,472,
d.
4,672,
229
