Bank CO approved a loan application of Client ME on January 1, 20A for P3,500,000. Client ME is required to pay 15% interest annually every December 31, from 20A until the principal is extinguished. Client ME has to make an equal annual principal payment of its obligation to commence December 31, 20A. An amount of P61,192 was paid by Client ME as its share from the origination fee totaling P161,192, and the rest was shouldered by the bank resulting to a 14.50% new effective interest rate. How much is the balance of the contra-asset account as of December 31, 20A?
Bank CO approved a loan application of Client ME on January 1, 20A for P3,500,000. Client ME is required to pay 15% interest annually every December 31, from 20A until the principal is extinguished. Client ME has to make an equal annual principal payment of its obligation to commence December 31, 20A. An amount of P61,192 was paid by Client ME as its share from the origination fee totaling P161,192, and the rest was shouldered by the bank resulting to a 14.50% new effective interest rate. How much is the balance of the contra-asset account as of December 31, 20A?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 8RE
Related questions
Question
M4
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning