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2. B
3. B
4. A
5. Solutions:
July 1, 20x1
1
Interest income (2M x 10%)** 200,000
6. Solutions:
Requirement (a):
The PV of the remaining cash flows is computed as follows:
Cash PV of 1 Present
Date flows @11% PV factors value
1/1/x3 1,000,000 n=0 1 1,000,000
0.90090090
1/1/x4 1,500,000 n=1 1 1,351,351
0.81162243
1/1/x5 1,500,000 n=2 3 1,217,434
3,568,785
Subsequent measurement:
Collection Interest Amortizatio Present
Date s income n value
1/1/x1 4,124,098
12/31/x1 480,000 453,651 26,349 4,097,749
12/31/x2 480,000 450,752 29,248 4,068,501
.
The impairment loss is computed as follows:
PV of remaining cash flows 3,568,785
Less: Carrying amount (4,068,501)
2
Impairment loss (499,716)
Requirement (b):
(3,568,785 – 1,000,000) x 11% = 282,566
7. Solution:
Requirement (a):
Date Cash on hand 180,000
Loss on transfer 20,000
Loans receivable 200,000
Requirement (b):
Date Cash on hand 180,000
Liability on repurchase agreement 180,000
Requirement (c):
Date Cash on hand 180,000
Loss on transfer 20,000
Loans receivable (200K – 20K) 180,000
Liability on repurchase agreement 20,000
9. Solution:
(a) Cash 723,000
Finance Charge 27,000
Notes Payable 750,000
10. Solutions:
3
(a) Cash 368,000
Due from Factor (2% × ₱400,000) 8,000
Loss on Sale of Receivables (6% × ₱400,000) 24,000
Accounts Receivable 400,000
11. Solution:
September 1, 2002
Notes Receivable 400,000
Accounts Receivable 400,000
October 1, 2002
Cash 405,066
Interest income 3,945
Notes Receivable 400,000
Gain 1,121
2. B
Solution:
Principal amount 150,000
Direct loan origination costs 4,000
Origination fee (150K x 4%) (6,000)
Carrying amount 148,000
3. A
Solution:
Principal amount 150,000
4
Origination fee (150K x 4%) (6,000)
Carrying amount 144,000
6. D Since the transfer of the bond is used only as security for the
loan, and not as a sale of the bond, Dayco would not recognize
the bond on its books at the time of the transfer. The bond would
be recognized on Dayco's books on the date Rayco defaulted and
at its fair value at that time.
7. C
Solution:
Year Expected fees Fractions
1 40,000 40/80
2 30,000 30/80
3 10,000 10/80
80,000
10. A
Solution:
NP = MV - D
MV = 10,000 + (10,000 x 60/360 x 6%) = 10,100
D = 10,100 x 9% x 30/360 = 75.75
NP = 10,100 – 75.75 = 10,024.25
2. C
5
3. Solutions:
July 1, 20x1
*** Interest revenue is computed on the gross carrying amount because the
loan is not credit-impaired (i.e., Stage 2 rather than Stage 3).
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