ABC Bank granted a loan to a client on January 1, 20x1. The interest on the loan is 10% payable annually starting December 31, 20x1. The loan matures in four years on December 31, 20x4. Pertinent information on the loan is provided below: Principal amount 2,000,000 Origination fee 154,430 Direct origination cost 32,890 Indirect origination cost 5,000 After considering the origination fee received from the borrower and the direct origination cost incurred, the effective interest rate on the loan is 12%. 1. At what amount shall the loan be initially measured on January 1, 20x1? 2. How much shall be reported as interest income for 20x1? 3. What is the carrying amount of the loan on December 31, 20x1?
ABC Bank granted a loan to a client on January 1, 20x1. The interest on the loan is 10% payable annually
starting December 31, 20x1. The loan matures in four years on December 31, 20x4. Pertinent information on
the loan is provided below:
Principal amount 2,000,000
Origination fee 154,430
Direct origination cost 32,890
Indirect origination cost 5,000
After considering the origination fee received from the borrower and the direct origination cost incurred, the
effective interest rate on the loan is 12%.
1. At what amount shall the loan be initially measured on January 1, 20x1?
2. How much shall be reported as interest income for 20x1?
3. What is the carrying amount of the loan on December 31, 20x1?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
