Problem 7-2 (IFRS)

Required:
1. Compute the carrying amount of the loan receivable on January 1, 2020.

Principal amount 4,000,000

Add: Direct origination cost 61,500
Less: Origination fee received from borrower ( 350,000)
Carrying amount of loan 3,711,500

2. Prepare a table of amortization for the loan receivable.

Date Interest Received Interest Income Amortization Carrying Amount

Jan. 1, 2020 3,711,500.00
Dec. 31, 2020 400,000 445,380.00 45,380.00 3,756,880.00
Dec. 31, 2021 400,000 450,825.60 50,825.60 3,807,705.60
Dec. 31, 2022 400,000 456,924.67 56,924.67 3,864,630.27
Dec. 31, 2023 400,000 463,755.63 63,755.63 3,928,385.90
Dec. 31, 2024 400,000 471,614.10 71,614.10 4,000,000.00

3. Prepare journal entries for 2020 and 2021.

Journal Entries

Jan. 2020
Loan receivable 4,000,000.00
Cash 4,000,000.00

Cash 350,000.00
Unearned interest income 350,000.00

Unearned interest income 61,500.00

Cash 61,500.00

Dec. 2020
Cash 400,000.00
Interest income 400,000.00

Unearned interest income 45,380.00

Interest income 45,380.00
Dec. 2021
Cash 400,000.00
Interest income 400,000.00
 Unearned interest income 50,825.60
Interest income 50,825.60

Problem 7-3 (IFRS)

Required:
1. Prepare journal entries for 2020, 2021, and 2022.

Journal Entries

Jan. 2020
Loan receivable 3,000,000
Cash 3,000,000

Cash 260,300
Unearned interest income 260,300

Unearned interest income 100,000

Cash 100,000

Dec. 2020
Cash 240,000
Interest income 240,000

Unearned interest income 50,382

Interest income 50,382

Dec. 2021
Cash 240,000
Interest income 240,000

Unearned interest income 53,405

Interest income 53,405

Dec. 2022
Cash 240,000
Interest income 240,000

Unearned interest income 56,513

Interest income 56,513
 Cash 3,000,000
Loan receivable 3,000,000

2. Present the loan receivable on December 31, 2020.

December 31, 2020

Interest received 240,000
Interest income 189,618
Amortization 50,382
Carrying amount – January 1, 2020 3,160,300
Carrying amount – December 31, 2020 3,109,918