An entity borrows RM3,000,000 from a bank for the purpose of its office building expansion. The interest rate is 10%. The term of financing is three years. Explain the initial measurement and recognition criteria.
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An entity borrows RM3,000,000 from a bank for the purpose of its office building expansion.
The interest rate is 10%. The term of financing is three years. Explain the initial measurement and recognition criteria.
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- Mohammed LLC is a growing consulting firm. The following transactions take place during the current year. A. On June 10, Mohammed borrows $270,000 from a bank to cover the initial cost of expansion. Terms of the loan are payment due in four months from June 10, and annual interest rate of 5%. B. On July 9, Mohammed borrows an additional $100,000 with payment due in four months from July 9, and an annual interest rate of 12%. C. Mohammed pays their accounts in full on October 10 for the June 10 loan, and on November 9 for the July 9 loan. Record the journal entries to recognize the initial borrowings, and the two payments for Mohammed.Zara Corporation borrowed RM100,000 from their bank for one year. The bank required the company to pay RM9,500 in interest at the end of the year plus maintain a minimum balance of RM10,000 with the bank in a chequing account throughout the year. What is the effective interest rate on this loan?On 1 April 2020, Apollo Berhad made a RM1,000,000 loan from the bank at an interest rate of10 percent, equal to its effective interest rate for the development of the company's power generation facilities. On 1 April, the loan was obtained and RM300,000 was used on qualifying properties. On 1 April, the company deposited the remaining balance at a rate of 6% per annum in a bank yielding interest.On 31 December 2020, when the construction was finished and ready for use, the full amount was withdrawn and paid to the contractor. On 31 March 2021, the company returned the loan to the bank. As of 1 April 2021, power generation facilities were eligible for use in the undertaking. Requirement : (a) Calculate the net borrowing cost that should be capitalised as part of the cost of the new store and the finance cost that should be reported in the income statement for the year ended 31 March 2021. (b) Show the extracts from the income statement for the year ended 31 March 2021 and the statement…
- Bowl Corporation has obtained a line of credit facility of $1 million from Plate Bank at 6% interest per annum to meet its $900,000 capital requirement. The capital is needed by Bowl Corporation for 100 days. The bank requires a 2% commitment fee and $50,000 compensating balance. Compute the amount of interest that has to be paid by Bowl Corporation to the bank for the line of credit.Determine the annual payment on a OMR 500,000 and 12 percent business loan from a commercial bank that is to be amortized over a five year period.A company establishes a sinking fund to discharge a debt of $750,000 due in 8 years by making equal semiannual deposits, the first due in 6 months. If the investment pays 12%, compounded semiannually, what is the size of the deposits?
- Suppose you borrowed Php200,000 from a local bank having an interest of 8% per annum, compounded monthly. If the debt was to be amortized by 36 equal payments and the first payment is to be made at the end of the first month, (a) determine the monthly payment, and (b) construct an amortization schedule/table.Using the PVIFA table determine the annual payment on a $600,000, 10 percent, business loan from a commercial bank that is to be amortized over a five-year period1. A contractor is constructing a project for which he will be paid in one lump sum upon satisfactory completion of the project. The contractor needs cash to finance the construction and opens a line of credit at their bank (the loan would be repaid at the end of the project). The construction project is expected to last 16 months, and the contractor expects to borrow $100,000 at the beginning of the first month, and at the end of each of the first six months, making a total borrowing of $700,000. The contractor then needs to borrow $250,000 per month at the end of month 7 through 16, for an additional $2,500,000. The owner agrees to pay the contractor the lump sum payment for the project at EOM 20, at which time the contractor will repay the bank. Interest on the contractors outstanding loan balance is 1.5% per month for the first 10 months and then 2% per month until EOM 20. Given this scenario, please answer the following questions. a. What is the minimum contract price for this…
- On January 1, 2015, SMDC Inc. was granted a non-interest bearing loan from Bangko Sentral ng Pilipinas with a face value of P1,000,000, term of 3 years and implicit rate of 10%. SMDC received the face value of the loan on the condition that the company will continuously operate for the 3-year term of the loan. Required: Based on the result of your audit, determine the following:__________1. Realized income from government grant for the year ended December 31, 2015__________2. Book value of deferred income from government grant as of December 31, 2015Person A deposits $ 1,000 in a bank account at the beginning of each year for 15 years. If the investment of person A is evaluated with an effective interest rate of 4% per annum for the first 5 years, 5% per annum for the second 5 years and 6% per annum in the third 5 years, calculate the accumulated value at the end of 15 years. ThanksABC Limited has a notes payable of $50,000 which will mature in five months. Management has both the intent and the ability to refinance it by taking out a new loan of the same amount at the due date which would be due only after 5 years. How would this situation be reported in financial statements prepared as of today's date? A: The original notes payable of $50,000 is classified as current, with a footnote describing management's plan for refinancing. B: The original notes payable of $50,000 is classified as current and the new loan is reported as a long-term liability. C: The original notes payable of $50,000 is classified as long-term; the new loan of $50,000 is not included in liabilities at this date. D: The original notes payable of $50,000 need not be reported at all; only the new loan of $50,000 is reported as a long-term liability.