Problem 2: (Measurement of Loan Receivable) [WITH PARTIAL ANSWERS]

ABC Bank granted a loan to a borrower on January 1, 2018. The interest on the loan is 8% payable
annually starting December 31, 2018. The loan matures in three years on December 31, 2020.

Principal amount P 3,000,000

Origination fee charged against the borrower 100,000
Direct origination cost incurred 260,300
Indirect origination cost incurred 20,000

After considering the origination fee charged to the borrower and the direct origination cost incurred,
the effective rate of the loan is 6%.

1. What is the carrying amount of the loan receivable on January 1, 2018?

Principal amount 3,000,000

Origination fee received -100,000

Direct origination 260,300

Carrying amount 3,160,300

2. What is the interest income for 2018? 189,618

3. What is the carrying amount of the loan receivable on December 31, 2018?
3,109,918

4. What is the interest income for 2019? 186,595.08