LLUSTRATION 8 On 31st March, 2008 Charlie Bank Ltd. finds that (1) On a term loan of $ 2 crores, interest for the last three quarters is in arrears beyond the due date. (2)The amount of $. 10 lakhs of a discounted bill was due on 1st January, 2008 but the same has not been received. (3) On a term loan of $. 1 crore, interest for the last one quarter
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- 29. On January 1, 20x1, ABC Bank extended a P1,000,000 loan to XYZ. Principal is due on December 31, 20x5 but 10% interest is due annually starting December 31, 20x1. On December 31, 20x3, XYZ was delinquent and it was ascertained that the loan is credit-impaired. ABC assessed that interests accruing on the loan will not be collected however the principal is expected to be collected in two equal annual installments starting December 31, 20x4. The current rate on December 31, 20x3 is 14%. Impairment loss is (use 6-decimal present value factor) The correct answer is: 232,2318. On January 1, 20x1, ABC Bank extended a P1,000,000 loan to XYZ. Principal is due on December 31, 20x5 but 10% interest is due annually starting December 31, 20x1. On December 31, 20x3, XYZ was delinquent and it was ascertained that the loan is credit-impaired. ABC assessed those interests accruing on the loan will not be collected however the principal is expected to be collected in two equal annual installments starting December 31, 20x4. The current rate on December 31, 20x3 is 14%. The carrying amount of the loan receivable on December 31, 20x4 will approximately be (use 6-decimal present value factor) The correct answer is: 454,545 REQUIRED: Provide a step-by-step solution.8. On January 1, 20x1, ABC Bank extended a P1,000,000 loan to XYZ. Principal is due on December 31, 20x5 but 10% interest is due annually starting December 31, 20x1. On December 31, 20x3, XYZ was delinquent and it was ascertained that the loan is credit-impaired. ABC assessed that interests accruing on the loan will not be collected however the principal is expected to be collected in two equal annual installments starting December 31, 20x4. The current rate on December 31, 20x3 is 14%. The carrying amount of the loan receivable on December 31, 20x4 will approximately be (use 6-decimal present value factor)
- 15 - A commercial bank in S. Gonçalo, RJ, lends R$150,000.00 to a customer, for a period of 3 months, at the rate of 3% a.m., simple interest, paid in advance. In addition, the bank requires an average balance of R$45,000.00 over the entire loan period. Calculate the cost to the customer of this trade bill discount operation, in simple and compound interest.10. A loan of $14,064was repaid at the end of 7 months. What size repayment check (principal and interest) was written, if a 5.8% annual rate of interest was charged? The amount of the repayment check was $16. Jefferson Bank made a loan at 7% interest for 236 days. If the amount of interest was $298.28, use the ordinary interest method to find the amount of principal (in $) borrowed. (Round your answer to the nearest dollar.)
- 1. On Dec. 31, 20x1, Tissue Co. determines that its loan receivablefrom Breakfast Co. with a carrying amount of P5,600,000 is impaired. Tissue Co. restructures the loan reducing it to P4,200,000. The restructured loan is payable in three equal annual payments starting on Jan. 1, 20x2. All future interest are waived. The effective interest rate applied on the loan on its initial recognition is 12%. The current market rate on Dec. 31, 20x1 is 10%. How much are the impairment loss in 20x1 and the interest income in 20x2 respectively? a. 1,833,929 and 451,929 b. 2,237,436 and 403,508 c. 2,237436 and 100,492 d. 1,833,929 and 283,929 The topic for the above problems are RECEIVABLES - ADDITIONAL CONCEPTS11. On January 1, 2011, Camry Company received a two-year P500,000 loan. The loan calls for interest payments to be made at the end of each year based on the prevailıng market rate at January 1 of each year. The interest rate at January 1, 2011 was 10%. Fortuner Company also has a two-year P500,000 loan but Fortuner's loan carries a fixed interest rate of 10%. Camry Company does not want to bear the risk that interest rates may increase in the second year of the loan. Fortuner Company believes that rates may decrease and it would prefer to have variable debt. So the two entities enter into an interest rate swap agreement whereby Fortuner agrees to make Camry's interest payment in 2012 and Camry likewise agrees to make Fortuner's interest payment in 2012. The two entities agree to make settlement payments, for the difference only, on December 31, 2012. If the interest rate on January 1, 2012 is 8%, what will be Camry's settlement with Fortuner? Using the information in MC 11, what…11. On January 1, 2011, Camry Company received a two-year P500,000 loan. The loan calls for interest payments to be made at the end of each year based on the prevailıng market rate at January 1 of each year. The interest rate at January 1, 2011 was 10%. Fortuner Company also has a two-year P500,000 loan but Fortuner's loan carries a fixed interest rate of 10%. Camry Company does not want to bear the risk that interest rates may increase in the second year of the loan. Fortuner Company believes that rates may decrease and it would prefer to have variable debt. So the two entities enter into an interest rate swap agreement whereby Fortuner agrees to make Camry's interest payment in 2012 and Camry likewise agrees to make Fortuner's interest payment in 2012. The two entities agree to make settlement payments, for the difference only, on December 31, 2012. If the interest rate on January 1, 2012 is 8%, what will be Camry's settlement with Fortuner? a. 10,000 payment b.…
- 21 Details for one of the loan of BB Company that is probably impaired during the period is as follows: The company made a loan of P40,000,000 to a customer with similar credit risk to BB Company on January 1, 2021. Interest is receivable on this loan at the end of each year at 2% per annum for the next five years. The loan was properly recorded and classified as amortized cost. The company made and initial assessment of the loan and the total expected credit losses over the life of the loan was P1,000,000. The discount rate applicable was at 2%. On January 1, 2021, the probability of default over the next 12 months was 5%. At December 31, 2021, there was a significant increase in the credit risk on the loan made by BB Company, the expert assessed that the total expected credit losses over the life of the loan was increase to P2,200,000. The discount rate applicable was at 2%. How much is the balance of the allowance for credit losses as of December 31, 2021?14. A company obtained a short-term loan of P250,000 an at annual interest rate of 6%. As a condition of the loan, the company is required maintain a compensating balance of P50,000 in a checking account. The company's checking account earns interest at an annual rate of 2%. Ordinarily the company maintains balance of P25,000 in its checking account for transaction purposes. What is the effective interest rate of the loan?1. the accountant finds from the copy of the loan record and from the company's checking account that the Bank has calculated the interest on 31/12 in the amount of 4,000 euros and has withdrawn the installment of the loan in the amount of 8,000 euros. 2. An additional 20,000 euros from customers are bad debts, the company's policy for the closing year is to cover them with provisions by 100%, and it also amortizes bad customers amounting to 10,000 euros. write the journal entries
