On 1 January 2017, a company which prepares financial statement to 30 June each year buys € 400,000 of 5%loan notes for € 411,225. Interest will be received half-yearly on 30 June and 31 December and the loan noteswill be repaid at a premium of 10% on 31 December 2020. The effective rate of interest is 3.5% per half year andthe company intends to hold this investment until maturity. Calculate the amount of interest income that shouldbe recognised in the company's financial statements for each of the years to 30 June 2017, 2018, 2019. Alsocalculate the amount at which the loan notes should be shown in the statement

Interest income and interest expenses are financial terms related to the interest earned or paid on…

Answered: On 1 January 2017, a company which…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Goose Limited took out a loan for £4 million on 1st December 2018. If the interest rate is 3% per annum, how much interest would be due on 30th June 2019?
A 5% loan note was issued on 1 April 2013 at its face value of GHS20m. Direct costs of the issue were GHS500,000. The loan note will be redeemed on 31 March 2016 at a substantial premium. The effective interest rate applicable is 10% per annum. At what amount will the loan note appear in the statement of financial position as at 31 March 2015?
On 1/1/2017, a loan of RM80,000 was taken and has to be repaid in level payment at the end of each month for 10 years. (i) Calculate the level monthly payment using an effective rate of interest of 8% per annum.On 1/11/2019, immediately after the payment, the monthly payment is reduced to RM910 and the remaining term is extended to clear the outstanding loan balance. The final smaller payment is to be paid one month after the last regular monthly payment. In addition, a service charge of RM955 is added to the loan outstanding on 1/11/ 2019 and the interest rate applied in future is increased to 9% per annum convertible monthly. (ii) Determine the new date on which the loan will be repaid.
Entei Bank granted a P5,000,000 loan to Raikou Company on January 1, 2020. The annual interest on the loan is 8% payable semi-annually. The loan matures in three years on December 31, 2022. The effective interest rate on the loan is 10%. How much is the total interest income to be presented on the statement of comprehensive income for 2020?
A 5% loan note was issued on 1st April 2020 at its face value of £40 million. Direct costs of the issue were £2,000,000. The loan note will be redeemed on 31st March 2023 at a substantial premium. The effective interest rate applicable is 10% per annum. At what amount will the loan note appear in the statement of financial position as at 31st March 2022? A. £39,800 B. £41, 780 C. £39, 780 D £43, 780
A Ltd issued a 5% loan note on 1 April 2012 at its face value of K25 million. Direct costs of the issue were K1,500,000. the loan note will be redeemed on 31 March 2015 at a substantial premium. The effective interest rate applicable is 10% per annum. Explain the accounting treatment of the above instrument
Suicune Bank granted a P5,000,000 loan to Raikou Company on January 1, 2020. The annual interest on the loan is 8% payable semi-annually. The loan matures in three years on December 31, 2022. The effective interest rate on the loan is 6%. How much is the carrying amount of the loan as of December 31, 2020?
A debt of P20, 000 is due on December 1, 2020. What was the value of this debt on December 1, 2018 at 14% converted semi-annually? P15,257.90 P33,500.39 P 28, 600.21 P36,548,19 Find the amount of an ordinary annuity of 20 semi-annual payments of P1, 000 if interest rate is 12% compounded semi-annually. P15,257.90 P33,567.21 P 38, 678.15 P36,785.59
To finance the purchase of the machine by issuing RM6 million, six-year, zero interest-bearing note to the seller on 1 July 2019. The expected interest rate for the note is 5.5%. The company is expected to pay off the note in six RM1 million instalments, at every financial year end. The company employs effective interest method. Calculate the yearly instalment and interest. Assume financial year ends December.
What sum of money will be required will be required to discharge a loan of P7,800 on April 1.2020, if the loan is made on October 1, 2011 at a rate of 9% compounded quarterly?
On January 1, 2022, Strive Bank loaned P2,000,000 to Strike Company. Under the loan agreement, the loan interest rate is 10% and that Strike Company is to pay interest on the loan annually every December 31 starting December 31, 2022. The loan will mature on December 31, 2026.On December 31, 2022, Strive Bank has determined that there is a slight increase in the credit risk of the loan, therefore needs to measure the 12-month expected credit loss for the loan. The bank determined that the probability of the loan being in default over the next 12 months is 1% and that 20% of the principal amount will be lost over the term of the loan. On December 31, 2023, the bank has determined that there is a significant increase in the credit risk of the loan. The probability of the loan being in default over the life of the loan is 10% and that 25% of the principal amount will be lost over the term of the loan. During 2024, the company began to face financial difficulties. On December 31, 2024, the…
At the end of 2020, the business has a notes payable with maturity value of TL18.000. The maturity date of the note is April 30, 2021. If the discount rate is 15%, what is the present value of the note on December 31, 2020 by using maturity value method? a.TL17.100 b.TL15.300 c.TL17.325 d.TL17.143

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