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    Loans Receivable PROBLEMS

    Uploaded by

    Kristine Bacani

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    © All Rights Reserved
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    Loans Receivable PROBLEMS

    Uploaded by

    Kristine Bacani
    5 views8 pages

    Original Title

    Loans Receivable PROBLEMS (1)

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    5 views8 pages

    Loans Receivable PROBLEMS

    Uploaded by

    Kristine Bacani

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 8

    PROBLEM 1:

    Pag-ibig Bank granted a loan to a borrower on January 1, 2021. The interest rate on the loan is 10%
    payable annually starting December 31, 2021. The loan matures in five years on December 31, 2025.

    Principal Amount P 4,000,000 4,000,000


    Origination Fee Received from borrower 350,000 -350,000
    Direct Origination cost incurred 61,500 61,500
    3,711,500 Initial Carrying amount on Jan 1, 2021

    The effective rate on the loan after considering the direct origination cost incurred and origination fee received is 12%

    1. What is the carrying amount of the loan receivable on January 1, 2021? 3,711,500

    2. What is the interest income for 2021? 445,380.00

    3. What is the carrying amount of the loan receivable on December 31, 2021?3,756,880

    DISCOUNT CA PA
    3,711,500 4,000,000

    THE AMORTIZATION FOR DISCOUNT WILL BE ADDED.


    Amortization Table:

    Date Collection of interests Interest Income


    (PV x Effective Interest Rate)
    January 1, 2021
    December 31, 2021 400,000 445,380.00

    rying amount on Jan 1, 2021

    fee received is 12%

    COLLECTION OF INTERESTS
    Amortization PV or CA
    (Interest Income - Collection) Previous Balance + PV of Amortization if discount
    3,711,500.00
    45,380.00 3,756,880.00

    400,000.00
    PROBLEM 2:

    INSPIRE Bank granted a loan to a borrower on January 1, 2021. The interest rate on the loan is 8%
    payable annually starting December 31, 2021. The loan matures in three years on December 31, 2023.

    Principal Amount P 3,000,000 3,000,000


    Origination Fee Received from borrower 100,000 -100,000
    Direct Origination cost incurred 260,300 260,300
    3,160,300 Initial Carrying amount of LR

    after considering the origination fee charged to the borrower and direct origination cost incurred, the effective rate on the
    loan is 6%.
    1. What is the carrying amount of the loan receivable on January 1, 2021? 3,160,300

    2. What is the interest income for 2021? 189,618

    3. What is the carrying amount of the loan receivable on December 31, 2021? 3,109,918

    4. What is the Interest Income for 2022? 186,595

    PREMIUM CA > PA 3,160,300 VS 3,000,000

    THE AMORTIZATION WILL BE DEDUCTED.


    Amortization Table:

    Date Collection of interests Interest Income


    (PV x Effective Interest Rate)
    January 1, 2021
    December 31, 2021 240,000 189,618.00
    December 31, 2022 240,000 186,595
    Initial Carrying amount of LR

    red, the effective rate on the

    COLLECTION OF INTERESTS
    Amortization PV or CA
    (Interest Income - Collection) Previous Balance - PV of Amortization if Premium
    3,160,300.00
    - 50,382.00 3,109,918.00
    - 53,405.00 3,056,513.00

    240,000.00
    PROBLEM 3:

    PATIENCE BANK LOANED P 5,000,000 TO NEVER GIVE UP COMPANY ON JANUARY 1, 2021. THE TERMS OF THE LOAN
    REQUIRE PRINCIPAL PAYMENTS OF 1,000,000 EACH YEAR FOR 5 YEARS PLUS INTEREST AT 8%

    THE FIRST PRINCIPAL AND INTEREST PAYMENT IS DUE ON JANUARY 1, 2022. NEVER GIVE UP COMPANY MADE THE REQUIRE P
    DURING 2022 AND 2023.

    HOWEVER, DURING 2023, NEVER GIVE UP COMPANY BEGAN TO EXPERIENCE FINANCIAL DIFFICULTIES, REQUIRING PATIENCE
    THE COLLECTIBILITY OF THE LOAN.

    ON DECEMBER 31, 2023, PATIENCE BANK HAS DETERMINED THAT THE REMAINING PRINCIPAL PAYMENT WILL BE COLLECTED
    OF INTEREST IS UNLIKELY. PATIENCE BANK DID NOT ACCRUE THE INTEREST ON DECEMBER 2023.

    THE PRESENT VALUE OF 1 AT 8% ARE AS FOLLOWS:

    FOR ONE PERIOD 0.926 1,000,000


    FOR TWO PERIODS 0.857 1,000,000
    FOR THREE PERIODS 0.794 1,000,000

    1. WHAT IS THE LOAN IMPAIRMENT LOSS ON DECEMBER 31, 2023? CA


    PV OF CF
    2. WHAT IS THE INTEREST INCOME FOR 2024?

    CA HIGHER THAN PV OF CF =

    206,160.00 INTEREST INCOME FOR 2024


    ERMS OF THE LOAN

    MPANY MADE THE REQUIRE PAYMENTS

    LTIES, REQUIRING PATIENCE BANK TO REASSESS

    AYMENT WILL BE COLLECTED BUT THE COLLECTION

    PV OF CF
    926,000.00
    857,000.00
    794,000.00

    2,577,000.00
    3,000,000
    2,577,000

    423,000 IMPAIRMENT LOSS

    IMPAIRMENT LOSS

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