Problems - VALIX

Origination fees received > Direct origination costs = increase interest income

4,000,000
150,000
- 342,100 192,100
Carrying amount 3,807,900

DATE INTEREST REC. INTEREST INC. AMORTIZATION PRESENT VALUE

Jan. 1, 2016 3,807,900
Dec. 31, 2016 400,000 456,948 56,948 3,864,848
Dec. 31, 2017 400,000 463,782 63,782 3,928,630
Dec. 31, 2018 400,000 471,370 71,370 4,000,000
192,100
2016
Jan. 1 Loan receivable 4,000,000
Cash 4,000,000

Cash 342,100
Unearned interest income 342,100
Unearned interest income 150,000
Cash 150,000

Dec. 31 Cash 400,000

Unearned interest income 56,948
Interest income 456,948
2017
Dec. 31 Cash 400,000
Unearned interest income 63,782
Interest income 463,782
2017
Dec. 31 Cash 400,000
Unearned interest income 71,370
Interest income 471,370

Cash 4,000,000
Loan receivable 4,000,000
Origination fees received > Direct origination costs = increase interest income

4,000,000
61,500
350,000 288,500
Carrying amount 3,711,500 1.)

2.) DATE INTEREST REC. INTEREST INC. AMORTIZATION PRESENT VALUE

Jan. 1, 2016 3,711,500
Dec. 31, 2016 400,000 445,380 45,380 3,756,880
Dec. 31, 2017 400,000 450,826 50,826 3,807,706
Dec. 31, 2018 400,000 456,925 56,925 3,864,630
Dec. 31, 2019 400,000 463,756 63,756 3,928,386
Dec. 31, 2020 400,000 471,614 71,614 4,000,000
288,500

3.)
2016
Jan. 1 Loan receivable 4,000,000
Cash 4,000,000

Cash 350,000
Unearned interest income 350,000

Unearned interest income 61,500

Cash 61,500

Dec. 31 Cash 400,000

Unearne interest income 45,380
Interest income 445,380

2017
Dec. 31 Cash 400,000
Unearne interest income 50,826
Interest income 450,826
Origination fees received < Direct origination costs = decrease interest income

3,000,000
260,300
100,000 160,300
3,160,300

2.)
Noncurrent asset:
Loan receivable 3,000,000
Direct orig cost (53,405 + 56,513) 109,918 (t-acct)
Carrying amount - Dec. 31, 2016 3,109,918

DATE INTEREST REC. INTEREST INC. AMORTIZATION PRESENT VALUE

Jan. 1, 2016 3,160,300
Dec. 31, 2016 240,000 189,618 50,382 3,109,918
Dec. 31, 2017 240,000 186,595 53,405 3,056,513
Dec. 31, 2018 240,000 183,487 56,513 3,000,000
160,300
1.) 2016
Jan. 1 Loan receivable 3,000,000
Cash 3,000,000
Cash 100,000
Direct origination cost 100,000
Direct Origination cost 260,300
Cash 260,300
Dec. 31 Cash 240,000
Interest income 189,618
Direct origination cost 50,382
2017
Dec. 31 Cash 240,000
Interest income 186,595
Direct origination cost 53,405
2018
Dec. 31 Cash 240,000
Interest income 183,487
Direct origination cost 56,513
Cash 3,000,000
Loan receivable 3,000,000
Origination fees received < Direct origination costs = decrease interest income

5,000,000
457,500
200,000 257,500
Carrying amount 5,257,500 1.)

2.) DATE INTEREST REC. INTEREST INC. AMORTIZATION PRESENT VALUE

Jan. 1, 2016 5,257,500
Dec. 31, 2016 500,000 420,600 79,400 5,178,100
Dec. 31, 2017 500,000 414,248 85,752 5,092,348
Dec. 31, 2018 500,000 407,652 92,348 5,000,000
3.) 2016 257,500
Jan.1 Loan receivable 5,000,000
Cash 5,000,000
Cash 200,000
Direct origination cost 200,000
Direct Origination cost 457,500
Cash 457,500
Dec. 31 Cash 500,000
Interest income 420,600
Direct origination cost 79,400
2017
Dec. 31 Cash 500,000
Interest income 414,248
Direct origination cost 85,752
2018
Dec. 31 Cash 500,000
Interest income 407,652
Direct origination cost 92,348
Cash 5,000,000
Loan receivable 5,000,000
IMPAIRMENT OF LOAN - annual

During 2016, date of default

dr. loss
cr. accrued interest
cr. Allow

1.) 2016 - date of default

Compute for PV of cash flows *1.08 / / = = =
Dec. 31, 2017 1,000,000 0.93 930,000
Dec. 31, 2018 2,000,000 0.86 1,720,000
Dec. 31, 2019 3,000,000 0.79 2,370,000
6,000,000 5,020,000
 Compute for impairment loss (CA - PV)
Carrying amount of loan (6M + (6M x 8%)) 6,480,000
PV of cash flows 5,020,000
IMPAIRMENT LOSS 1,460,000
2.)
2016
Dec. 31 Impairment loss 1,460,000
Accrued interest receivable (6M x 8%) 480,000
Allowance for loan impairment (bal) (amortized as interest income) 980,000
Statement of Financial Position - Dec. 31, 2016
Loan receivable (10M - 2M - 2M) or (1M + 2M + 3M) or (t-account) 6,000,000
Allowance for loan impairment (t-account) 980,000
Carrying amount 5,020,000
2017
Dec. 31 Cash 1,000,000
Loan receivable 1,000,000
Allowance for loan impairment (5020K x 8%) 401,600
Interest income (amortized as interest income) 401,600
Statement of Financial Position - Dec. 31, 2017
Loan receivable (6M - 1M) (t-account) 5,000,000
Allowance for loan impairment (980K - 401.6K) (t-account) 578,400
Carrying amount 4,421,600
2018
Dec. 31 Cash 2,000,000
Loan receivable 2,000,000
Allowance for loan impairment (4,421,600 x 8%) 353,728
Interest income (amortized as interest income) 353,728
Statement of Financial Position - Dec. 31, 2018
Loan receivable (6M - 1M - 2M) (t-account) 3,000,000
Allowance for loan impairment (t-account) 224,672
Carrying amount 2,775,328
2019
Dec. 31 Cash 3,000,000
Loan receivable 3,000,000
Allowance for loan impairment (t-account) 224,672
Interest income (due to rounding off) 224,672
IMPAIRMENT OF LOAN - lump sum to annual

Jan. 1, 2014
dr. Loan receivable 7.5M
cr. Cash 7.5M
Jan. 1, 2015
dr. Cash 900K
cr. Interest income 900K

record an allowance until end

Dec. 31, 2015

dr. accrued 900K
cr. Int inc 900K
accrued for the whole year of 2015, to
be paid Jan 1, 2016 sana, thus, remain to
be accrued
1.) 2016 - date of default
Computation of PV of loan receivable
Dec. 31, 2017 500,000 0.89 445,000
Dec. 31, 2018 1,000,000 0.8 800,000
Dec. 31, 2019 2,000,000 0.71 1,420,000
Dec. 31, 2020 4,000,000 0.64 2,560,000
7,500,000 5,225,000
2.) Computation of Impairment loss
Carrying amount of loan - Dec. 31, 2016
Loan receivable - Dec. 31, 2016 7,500,000
Accrued interest receivable (7.5M x 12%) 900,000 8,400,000
PV of loan receivable 5,225,000
IMPAIRMENT LOSS 3,175,000
3.) 2016
Dec. 31 Impairment loss 3,175,000
Accrued interest receivable (7.5M x 12%) 900,000
Allowance for impairment 2,275,000
Statement of Financial Position - Dec. 31, 2016
Loan receivable (t-account) 7,500,000
Allowance for loan impairment (t-account) 2,275,000
Carrying amount 5,225,000
2017
Dec. 31 Cash 500,000
Loan receivable 500,000
Allowance for loan impairment (5.225K x 12%) 627,000
Interest income (amortized as interest income) 627,000
Statement of Financial Position - Dec. 31, 2017
Loan receivable (t-account) 7,000,000
Allowance for loan impairment (t-account) 1,648,000
Carrying amount 5,352,000
2018
Dec. 31 Cash 1,000,000
Loan receivable 1,000,000
Allowance for loan impairment (5.352K x 12%) 642,240
Interest income (amortized as interest income) 642,240
IMPAIRMENT OF LOAN - lump sum

* record interest income

* record an allowance for only 2 years.

* additional 1 year = YEAR 2022

1.09 / / = = =

1.) 2016 - Date of default

Computation of PV of future interest and pricipal payments
Dec. 31, 2019 (4M x 9%) 360,000 0.772 277,920
Dec. 31, 2020 (4M x 9%) 360,000 0.708 254,880
Dec. 31, 2021 (4M x 9%) 360,000 0.650 234,000
Dec. 31, 2022 (4M x 9%) + 4M 4,360,000 0.596 2,598,560
3,365,360
2.) Computation of Impairment loss - Dec. 31, 2016
Carrying amount of loan
Loan receivable - Dec. 31, 2016 4,000,000
Accrued interest receivable (no accrued, because paid) 4,000,000
PV of loan 3,365,360
IMPAIRMENT LOSS 634,640

3.) 2016
Dec. 31 Cash (4M x 9%) 360,000
Interest income (the borrower paid the interest) 360,000
Impairment loss 634,640
Allowance for impairment loss (amortized as interest income) 634,640
Statement of Financial Position - Dec. 31, 2016
Loan receivable (t-account) 4,000,000
Allowance for loan impairment (t-account) 634,640
Carrying amount 3,365,360
2017
Dec. 31 NO INTEREST PAYMENT
Allowance for loan impairment (3,365,360 x 9%) 302,882
Interest income (amortized as interest income) 302,882
Statement of Financial Position - Dec. 31, 2016
Loan receivable (t-account) 4,000,000
Allowance for loan impairment (t-account) 331,758
Carrying amount 3,668,242
2018
Dec. 31 NO INTEREST PAYMENT
Allowance for loan impairment (due to rounding off) 331,758
Interest income (amortized as interest income) 331,758
Statement of Financial Position - Dec. 31, 2016
Loan receivable (t-account) 4,000,000
Allowance for loan impairment (t-account) -
Carrying amount 4,000,000
2019 - 2021
Dec. 31 Cash (4M x 9%) 360,000
Interest income 360,000
2022
Dec. 31 Cash (4M x 9%) 4,360,000
Interest income 360,000
Loan receivable 4,000,000
THREE STAGE OF IMPAIRMENT APPROACH

Stage 1 12-month expected credit loss

=(3M-(3M*90%*0.65))*2%
24,900

Stage 2 Lifetime expected credit loss

=((3M-(3M*60%)*0.71)*30%)-24,900
491,700

Stage 3 Impaired
=(3M - (3M*40%)*0.77) - 24.9K - 491.7K
1,559,400

2019
Jan. 1 Loan receivable 3,000,000
Cash 3,000,000
Dec. 31 Cash (3M x 9%) 270,000
Interest income 270,000
2019 - Stage 1 of default
Computation of PV of cash flows
Carrying amount - Dec. 31, 2019 (t-account) 3,000,000
Probability of collection 90%
Expected cash flow 2,700,000
PV Factor for 5 years (1.09 / / = = = = =) 0.65
Present value of cash flows 1,755,000
Computation of Impairment loss
Carrying amount of loan 3,000,000
PV of loan 1,755,000
Expected credit loss 1,245,000
Probability of default within 12-months 2%
12-month expected credit loss allowance 24,900

Impairment loss 24,900

Allowance for loan impairment 24,900
Statement of Financial Position - December 31, 2019
Loan receivable (t-account) 3,000,000
Allowance for loan impairment (t-account) 24,900
Carrying amount 2,975,100
2020
Dec. 31 Cash 270,000
Interest income 270,000

2020 - Stage 2
Computation of PV of cash flows
Carrying amount of loan - Dec. 31, 2020 3,000,000
Probability of collection 60%
Expected cash flow 1,800,000
PV factor for 4 years 0.71
PV of cash flows 1,278,000

Computation of Impairment loss

CA of loan 3,000,000
PV of loan 1,278,000
Expected credit loss 1,722,000
Probability of default over the remaining term (4 years) 30%
Lifetime expected credit loss allowance 516,600
Less: Credit balance in allowance 24,900
Impairment loss (increase) 491,700

Impairment loss 491,700

Allowance for loan impairment 491,700
 Statement of Financial Position - December 31, 2020
Loan receivable (t-account) 3,000,000
Allowance for loan impairment (t-account) 516,600
Carrying amount 2,483,400
2021
Dec. 31 Cash (gross CA because loan is still under stage 2 for entire 2021) 270,000
Interest income (interest is collected in 2021) 270,000
2021 - Stage 3
Computation of PV of cash flows
Carrying amount of loan - Dec. 31, 2021 3,000,000
Probability of collection 40%
Expected cash flows 1,200,000
PV Factor for 3 period 0.77
PV of cash flows 924,000

Computation of Impairmet loss

CA of loan 3,000,000
PV of loan 924,000
Expected credit loss 2,076,000
Lifetime expected credit loss 516,600
Impairment loss 1,559,400
Impairment loss 1,559,400
Allowance for loan impairment 1,559,400
Allowance for loan impairment (3M x 60%) 1,800,000
Loan receivable (evidence of impairment) 1,800,000
Statement of Financial Position - December 31, 2021
Loan receivable (t-account) 1,200,000
Allowance for loan impairment (t-account) 276,000
Carrying amount 924,000
2022
Dec. 31 Allowance for loan impairment (924K x 9%) 83,160
Interest income 83,160
Statement of Financial Position - December 31, 2022
Loan receivable (t-account) 1,200,000
Allowance for loan impairment (t-account) 192,840
Carrying amount 1,007,160
2023
Dec. 31 Allowance for loan impairment (1,007,160 x 9%) 90,644
Interest income 90,644
2024
Dec. 31 Allowance for loan impairment (t-account) (bal) 102,196
Interest income 102,196
Cash (3M x 40%) or (3M - 1.8M) 1,200,000
Loan receivable (t-account) 1,200,000
Origination fees received > Direct origination costs = increase interest income

1.) Principal amount 5,000,000

Unearned interest income:
Direct origination cost incurred * outright expense 100,000
Indirect origination cost incurred
Origination fee received 340,000 240,000
Carrying amount - Jan. 1, 2016 BEG 4,760,000 A.

2.) DATE INTEREST REC. INTEREST INC AMORTIZATION PRESENT VALUE

Jan. 1, 2016 4,760,000
3..) Dec. 31, 2016 500,000 571,200 71,200 4,831,200 A. C.
Dec. 31, 2017 500,000 579,744 79,744 4,910,944
Dec. 31, 2018 500,000 589,056 89,056 5,000,000
240,000
LOAN PAYABLE (Borrower)

* indirect origination cost = expensed outright

Principal amount 1,500,000

Direct origination cost 40,000
Origination fee (1.5M x 4%) 60,000
Carrying amount 1,480,000 B.

Loan payable 1,500,000

Origination fee charged by bank 60,000
Carrying amount 1,440,000 A.

see prob 24-4

Interest income for Dec. 2016

(194K x 12.4% x 1/12) 2,005 C.
IMPAIRMENT OF LOAN - annually

* interest and principal payments are every Jan. 1, made payments on 2015 and 2016
** the bank did not accrue interest on Dec. 31, 2016
*** remaining principal payment will be collected as originally scheduled
1.) 2016 - date of default
Computation of PV of cash flows
Jan. 1, 2017 1,000,000 1,000,000
Jan. 1, 2018 1,000,000 0.93 930,000
Jan. 1, 2019 1,000,000 0.86 860,000
3,000,000 2,790,000
Computation of Impairment loss
Carrying amount 3,000,000
PV of cash flows 2,790,000
IMPAIRMENT LOSS 210,000 B.
2016 Impairment loss 210,000
Dec. 31 Allowance for loan impairment 210,000
Statement of Financial Position - Dec. 31, 2016
Loan receivable 3,000,000
Allowance for loan impairment 210,000
Carrying amount 2,790,000
2.) 2017
Jan. 1 Cash 1,000,000
Loan receivable (originally as scheduled) 1,000,000
Statement of Financial Position - Jan. 1, 2017
Loan receivable (3M - 1M) 2,000,000
Allowance for loan impairment 210,000
Carrying amount 1,790,000
 Allowance for loan impairment (1,790K x 8%) 143,200
Interest income 143,200 B.
3.) Statement of Financial Position - Dec. 31, 2017
Loan receivable (3M - 1M) 2,000,000
Allowance for loan impairment 66,800
Carrying amount 1,933,200 A.

IMPAIRMENT OF LOAN - lump sum to annual

* interest payment was made as scheduled on Jan. 1, 2015, unable to make in 2016
** the bank accrued in Dec. 31, 2015, but did not accrue interest for 2016
2015
Jan. 1 Cash 360,000
Interest income 360,000

1.) 2016 - Date of default

Computation of PV of cash flows
Dec. 31, 2017 1,500,000 0.89 1,335,000
Dec. 31, 2018 2,000,000 0.8 1,600,000
Dec. 31, 2019 2,500,000 0.71 1,775,000
Dec. 31, 2020 3,000,000 0.64 1,920,000
9,000,000 6,630,000
Computation of Impairment loss
CA of loan
Loan receivable - Dec. 31, 2016 (9M x 12%) 9,000,000
Accrued interest receivable 1,080,000 10,080,000
PV of loan 6,630,000
IMPAIRMENT LOSS 3,450,000 B.
2016
Dec. 31 Impairment loss 3,450,000
Accrued interest receivable (9M x 12%) 1,080,000
Allowance for loan impairment (bal) 2,370,000
Statement of Financial Position - Dec. 31, 2016
Loan receivable (t-account) 9,000,000
Allowance for loan impairment (t-account) 2,370,000
Carrying amount 6,630,000
2017
Dec. 31 Cash 1,500,000
Loan receivable 1,500,000
2.) Allowance for loan impairment 795,600
Interest income 795,600 A.
Statement of Financial Position - Dec. 31, 2017
Loan receivable (t-account) 7,500,000
Allowance for loan impairment (t-account) 1,574,400
3.) Carrying amount 5,925,600 A.
IMPAIRMENT OF LOAN - annually

* principal and interest payments every Jan. 1, made payments on 2015 and 2016
** bank accrued interest for 2016
1.) 2016 - Date of Default
Computation of PV of cash flows
Jan. 1, 2017 1,000,000 1,000,000
Jan. 1, 2018 2,000,000 0.91 1,820,000
Jan. 1, 2019 3,000,000 0.83 2,490,000
6,000,000 5,310,000
Computation of Impairment loss
CA of loan - Dec. 31, 2016
Loan receivable (6M x 10%) 6,000,000
Accrued interest receivable 600,000 6,600,000
PV of loan 5,310,000
IMPAIRMENT LOSS 1,290,000 C.

Dec. 31 Impairment loss 1,290,000

Accrued interest receivable (6M x 10%) 600,000
Allowance for loan impairment (bal) 690,000
2017
Jan. 1 Cash 1,000,000
Loan receivable 1,000,000
Statement of Financial Position - Jan. 1, 2016
Loan receivable (t-account) 5,000,000
Allowance for loan impairment (t-account) 690,000
Carrying amount 4,310,000
2.) Allowance for loan impairment 431,000
Dec. 31 Interest income 431,000 B.
Statement of Financial Position - Dec. 31, 2017
Loan receivable (t-account) 5,000,000
Allowance for loan impairment (t-account) 259,000
3,) Carrying amount 4,741,000 B.
IMPAIRMENT OF LOAN - lumpsum (2 rates given)

* from 10% to down only 4% interest annually

** no accrued interest on Dec. 31, 2016
1.) 2016 - Date of default 1.10 // = = =
Computation of PV of future interest and principal payments

(200K x 2.49) =
PV of interest 200,000 0.91 182,000
PV of interest 200,000 0.83 166,000
PV of interest 200,000 0.75 150,000
PV of Principal 5,000,000 0.75 3,750,000
PV of loan 4,248,000
CA of loan 5,000,000
IMPAIRMENT LOSS - 752,000 A.
Dec. 31 Cash 200,000
Interest income 200,000
Impairment loss 752,000
Allowance for loan impairment 752,000
Statement of Financial Position - Dec. 31, 2016
Loan receivable (t-account) 5,000,000
Allowance for loan impairment (t-account) 752,000
Carrying amount 4,248,000
2.) Interest income 424,800 B.
Interest received 200,000
Amortization of allowance for impairment 224,800
*do this if INTEREST REC. INTEREST INC. AMORTIZATION PRESENT VALUE
2 rates are given Dec. 31, 2016 4,248,000
Dec. 31, 2017 200,000 424,800 224,800 4,472,800
Dec. 31, 2018 200,000 447,280 247,280 4,720,080
Dec. 31, 2019 200,000 479,920 279,920 5,000,000
752,000
2017
Dec. 31 Cash 200,000
Interest income 200,000
Allowance for loan impairment 224,800
Interest income 224,800
OR
Cash 200,000
Allowance for loan impairment 224,800
Interest income 424,800
3.) Statement of Financial Position - Dec. 31, 2016
Loan receivable (t-account) 5,000,000
Allowance for loan impairment (t-account) 527,200
Carrying amount 4,472,800 C.
IMPAIRMENT OF LOAN - lump sum (2 rates given)

1.) Computation of PV of loan 1.12 // = = = = =

PV of Principal 5,000,000 0.57 2,850,000
PV of interest 500,000 3.6 1,800,000
Cash paid to borrower 4,650,000 D.

DATE INTEREST REC. INTEREST INC. AMORTIZATION PRESENT VALUE

Dec. 31, 2016 4,650,000 5,000,000
Dec. 31, 2017 500,000 558,000 58,000 4,708,000 350,000
2.) Dec. 31, 2018 500,000 564,960 64,960 4,772,960 C.
Dec. 31, 2019 500,000 572,755 72,755 4,845,715
Dec. 31, 2020 500,000 581,486 81,486 4,927,201
Dec. 31, 2021 500,000 572,799 72,799 5,000,000
350,000
Dec. 31, 2016
Loan receivable 5,000,000
Cash 4,650,000
Unearned interest income 350,000
Dec. 31, 2017
Cash 500,000
Unearned interest income 58,000
Interest income (no impairment because the loan in 2016 is not yet impaired) 558,000
Dec. 31, 2018
Cash 500,000
Unearned interest income 64,960
Interest income 564,960
2018 - Date of default
Computation of Pv of future cash flows 1.12 // = = =
PV of Principal (only 3M) 3,000,000 0.71 2,130,000
PV of interest (still int on 5M) 500,000 2.4 1,200,000
PV of loan 3,330,000
Computation of Impairment loss
CA of loan
Loan receivable 5,000,000
Less: Unearned interest income 227,040 4,772,960
PV of loan 3,330,000
IMPAIRMENT OF LOAN 1,442,960 B.
IMPAIRMENT OF LOAN - lump sum

* interest for Dec. 31, 2016 has not been received and not been recognized
** all annual interest will be payed at maturity ------> (4M x 8% x 5yrs)
*** from 4M to 2M
1.) 2016 - Date of default
Computaion of PV of cash flows
PV of Principal 2,000,000 0.735 1,470,000
PV of interest (4M x 8% x 5yrs) 1,600,000 0.735 1,176,000
Total PV of loan 2,646,000 A.
CA of loan 4,000,000
2.) IMPAIRMENT LOSS - 1,354,000 A.

Impairment loss 1,354,000

Allowance for loan impairment 1,354,000
Statement of Financial Position - Dec. 31, 2016
Loan receivable (t-account) 4,000,000
Allowance for loan impairment (t-account) 1,354,000
Carrying amount 2,646,000

3.) Allowance for loan impairment 211,680

Interest income 211,680 B.
IMPAIRMENT OF LOAN - lumpsum

Jan. 1, 2015
Loan receivable 5,000,000
Cash 5,000,000
Dec. 31, 2015
Cash (5M x 9%) 450,000
Interest income 450,000
Dec. 31, 2016
Accrued interest receivable (5M x 9%) 450,000
Interest income INTEREST ACCRUED will be paid at maturity (Dec. 31, 2019) 450,000

Carrying amout of loan:

Loan receivable 5,000,000
Accrued interest receivable 450,000 5,450,000 B.
PV of loan
PV of Principal and interest (5450K x .772) 4,207,400 A.
IMPAIRMENT LOSS 1,242,600 A.
NET PROCEEDS / GAIN ON SALE

Cash proceeds 2,100

Interest rate swap 140
Call option 80
Recourse obligation - 120
Net proceeds - SP equal to FV 2,200
Carrying amount 2,000
Gain on sale 200 B.

Cash 2,100
Interest swap 140
Call option 80 A.
Loan receivable 2,000
Recourse obligation 120
Gain on sale 200

Cash proceeds 2,100

Interest rate swap 140
Call option 80
Recourse obligation - 120
Fair value of service - 50
Net proceeds - net sale price 2,150
Carrying amount 2,000
Gain on sale 150 C.
 Interest income for 2018
(259,960 x 1/12) 21,663 C.

Accrued interest receivable

(240K x 1/12) 20,000

DATE INTEREST REC. INTEREST INC. AMORTIZATION PRESENT VALUE

Dec. 1, 2018 1,940,000
Dec. 1, 2019 240,000 259,960.0 19,960.0 1,959,960