Sample Prob PDF

CHAPTER 5- LOANS RECEIVABLE
ACCTG 102- INTERMEDIATE ACCOUNTING 1

SAMPLE PROBLEMS AND THEORIES
1. All of the following are characteristics of financial assets classified as loans and receivables,
except
a. They are not quoted in active market.

b. They have fixed or determinable payments.
c. The holder has demonstrated positive intention and ability to hold them to maturity.
d. The holder can recover substantially all its investment.
2-4
2. On Jan. 1, 2022, Santayana Corp. sold a specialmachine that had a cash price of P900,000.
The buyerpaid P100,000 cash and signed a 4-year note. The note specified that it would be
paid off in four equalannual payments of P274,565 each starting on Dec.31, 2022. The
payments include 14% Effective interest. Thecarrying amount of the receivable on Dec. 31,
2023, is
a. P525,435
c. P701,435
b. P 452,111
d. P725,435
3. What is the interest payment on December 31, 2024?
a. P 112,000
b. P 63,296
c. P 89,241
d. P 33,718
4. What is the carrying amount on January 1,2025?
a. P 240,842
c. P637,435
b. P 452,111
d. P725,435
ACCTG 102 1|Page

5. What is effective interest rate?
a. The rate that exactly discounts estimated cash receipts through the expected life of the
financial asset to the gross carrying amount of a financial asset.
b. The rate that exactly discounts estimated cash receipts through the expected life of the
financial asset to the amortized cost of a financial asset.
c. The rate that exactly discounts the estimated future cash payments or receipts through
the expected life of the financial asset to the amortized cost of a financial asset that is a
purchased or originated credit-impaired financial asset.
d. The rate that an entity would incur to borrow over a similar term, and with a similar
security, the funds necessary to purchase an asset.
Use the following information for the next five questions.

Money Bank granted a loan to a borrower on Jan. 1, 2022. The interest rate on the loan is 10% payable
annually starting Dec. 31, 2022. The loan matures in five years on Dec. 31, 2026. The data related to the
loan are:
Principal amount P4,000,000

Direct loan origination cost 61,520
Indirect loan origination cost 26,400
Origination fee received from 350,000
borrower
6. Origination fees may include compensation foractivities such as:
I. Evaluating the borrower’s financial condition

II. Evaluating and recording guarantees, collateraland other security arrangements
III. Negotiating the terms of the instrument
IV. Preparing and processing documents and closingthe transaction
a. I, II, III and IV
b. I, II and III only
c. I and II only
d. II and III only
7. The effective interest rate on this loan is.

a. P14% c. P12%
b. P13% d. P11%
8. The carrying amount of the loan receivable on Dec. 31,2022, is
a. P4,000,000 c. P3,756,902
b. P3,807,730 d. P3,711,520
9. The Interest Income on Dec. 31,2024, is.
a. P 450,828 c. P 455,800
b P 456,928 d. P 463,759
ACCTG 102 2|Page

10. The carrying amount of the loan receivable on Dec. 31,2025, is
a. P 3,888,900 c. P 3,807,730
b. P 3,864,658 d. P3,928,417
11. Evidence that a financial asset is credit-impaired include observable data about the following events:
I. Significant financial difficulty of the issuer or obligor.

II. A breach of contract, such as a default or pastdue event.
III. The lender of the borrower, for economic or contractual reasons relating to the borrower’s
financial difficulty, having granted to the borrower a concession that the lender would not
otherwise consider.
IV. It is becoming probable that the borrower will enter bankruptcy or other financial
reorganization.
V. The disappearance of an active market for that financial asset because of financial difficulties.
VI. The purchase or origination of a financial asset at a deep discount that reflects the incurred
credit losses.
a. I, II, III, IV, V and VI.

b. I, II, IV and VI only.
c. I, II, III, IV and V only.
d. I, IV and VI only.
12-16. 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 3 years on December 31, 2023.
Principal Amount P 3,000,000
Origination Fee received from the borrower. P 100,000
Direct Origination cost incurred. P 260,300
After considering the origination fee charged to the borrower and the direct origination cost incurred, the
effective interest rate of the loan is 6%.
12. what is the carrying amount of the loan receivable on December 31, 2022?
13. what is the Interest Income on December 31, 2023?
14. what is the total interest income as of December 31, 2023?
15. what is the carrying amount of the loan on December 31, 2023?
16. what is the interest income on December 31,2022?
ACCTG 102 3|Page

17-18
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 P1,000,000 each year for 5 years plus interest at 8%.
The first principal and interest payments is due on January 1, 2022. Never give up company made the
require payments during 2022 and 2023.
However, during 2023, never give up company began to experience financial difficulties, requiring patience
bank to reassess the collectibity of the loan.
On December 31, 2023, patience bank has determined that the remaining principal payment will be
collected but the collection of interest is unlikely.
17. what is the loan impairment loss as of December 31, 2023?
18. What is the carrying amount after deducting the impairment loss?
ACCTG 102 4|Page

ACCTG 102 5|Page

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CHAPTER 5- LOANS RECEIVABLE

ACCTG 102- INTERMEDIATE ACCOUNTING 1

a. They are not quoted in active market.

3. What is the interest payment on December 31, 2024?

4. What is the carrying amount on January 1,2025?

ACCTG 102 1|Page

Use the following information for the next five questions.

Principal amount P4,000,000

6. Origination fees may include compensation foractivities such as:

I. Evaluating the borrower’s financial condition

7. The effective interest rate on this loan is.

8. The carrying amount of the loan receivable on Dec. 31,2022, is

9. The Interest Income on Dec. 31,2024, is.

ACCTG 102 2|Page

I. Significant financial difficulty of the issuer or obligor.

a. I, II, III, IV, V and VI.

13. what is the Interest Income on December 31, 2023?

14. what is the total interest income as of December 31, 2023?

16. what is the interest income on December 31,2022?

ACCTG 102 3|Page

17. what is the loan impairment loss as of December 31, 2023?

ACCTG 102 4|Page

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