12. Using the information in MC 11, what amount will Camry report as fair value of the interest rate swap on December 31, 2011? a. 500,000 b. 10,000 O c. 9,259 O d. 9,091
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- A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an annual interest rate of 11%. If 6 months have passed since note establishment, what would be the recorded interest figure at that time? A. $7,150 B. $65,000 C. $14,300 D. $2,38311. 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.…
- Drake Corporation takes out a term loan payable in 12 year-end annual installments of P5,000 each. The interest rate is 14 percent. (a) What is the amount of the loan? (b) what is the loan balance at the end of year 2? CHOOSE THE LETTER OF ANSWERA. (a)P27,301.50 and (b) P26,080.63B. (a)P15,301.50 and (b) P26,080.63C. (a)P26,301.50 and (b) P26,080.63D. (a)P25,301.50 and (b) P26,080.63E. None of the above4. Magic Finance Company reports a loan receivable from Blue Company in the amount of P5,000,000. The initial loan’s repayments include a 10% interest rate plus annual principal payment of P1,000,000 on January 1 of each year. The loan was made on January 1, 2020. Blue made the P500,000 interest payments for 2020 but did not make the P1,000,000 principal payment nor the P500,000 interest payment in 2021. Blue is having financial difficulty because of restrictions brought about by the pandemic; thus, Magic has concluded that the loan is impaired. Analysis of Blue’s financial condition on December 31, 2021 indicates that the principal and interest currently due can be collected but it is probable tat no further interest can be collected. The probable amounts and timing of collection are determined as follows: December 31, 2022 – P1,750,000; December 31, 2023 – P2,000,000; December 31, 2024 – P1,750,000. The present value factors at 10% are as follows: One period – 0.909; Two periods –…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…
- Magic Finance Company reports a loan receivable from Blue Company in the amount of P5,000,000. The initial loan's repayments include a 10% interest rate plus annual principal payment of P1,000,000 on January 1 of each year. The loan was made on January 1, 2022. Blue made the P500,000 interest payments for 2022 but did not make the P1,000,000 principal payment nor the P500,000 interest payment in 2023. Blue is having financial difficulty and Magic has concluded that the loan is impaired. Analysis of Blue's financial condition on - December 31, 2023 indicates that the principal and interest currently due can be collected but it is probable that no further interest can be collected. The probable amounts and timing of collection are determined as follows: December 31, 2024 - P1,750,000December 31, 2025 - 2,000,000December 31, 2026 - 1,750,000Total P5,500,000 The preset value factors at 10% are as follows: 1 period - 0.09; 2…Lugia Bank granted a P4,000,000 loan to Ho-oh Company on January 1, 2020. The annual interest of the loan is 12% payable semi-annually. The loan matures in two years. The effective interest rate on the loan is 16%. (Round off present value factors up to four decimal point; only round off up to two decimals the final value) Questions: 1. What is the initial carrying amount of the loan? 2. How much is the interest income for the year 2020? 3, What is the balance of the discount on the loan as of December 31, 2020?Magic Finance Company reports a loan receivable from Blue Company in the amount of P5,000,000. The initial loan's repayments include a 10% interest rate plus annual principal payment of P1,000,000 on January 1 of each year. The loan was made on January 1, 2022. Blue made the P500,000 interest payments for 2022 but did not make the P1,000,000 principal payment nor the P500,000 interest payment in 2023. Blue is having financial difficulty and Magic has concluded that the loan is impaired. Analysis of Blue's financial condition on - December 31, 2023 indicates that the principal and interest currently due can be collected but it is probable that no further interest can be collected. The probable amounts and timing of collection are determined as follows: December 31, 2024 - P1,750,000December 31, 2025 - 2,000,000December 31, 2026 - 1,750,000Total P5,500,000 The preset value factors at 10% are as follows: 1 period - 0.09; 2…
- For items 11 to 12 LYR Finance Company reports a loan receivable from Choice Company in the amount of P7,500,000. The initial loan's repayments include a 10% interest rate plus annual principal payment of P1,500,000 on January 1 of each year. The loan was made on January 1, 2021. Choice made the P750,000 interest payments for 2021 but did not make the P1,500,000 principal payment nor the P500,000 interest payment in 2022. Choice is having financial difficulty and LYR has concluded that the loan is impaired. Analysis of Choice's financial condition on December 31, 2022 indicates that the principal and interest currently due can be collected but it is probable that no further interest can be collected. The probable amounts and timing collection are determined as follows: December 31, 2023 December 31, 2024 December 31, 2025 Total P2,140,000 3,400,000 2,950,000 P8,490,000 The present value factors at 10% are as follows: 1 period - 0.909; 2 periods 0.826; 3 periods - 0.751 How much is the…ABC Company enters into an IRG arrangement with Ch-bank for a 9 months, P800,000 loan starting 3 months from now. The IRG rate is at 11% and the bank quotes a premium of P4,000. Compute for the effective interest rate if the actual interest rate 3 months from now is 8% . Show your solution.Garantea Company enters into an IRG arrangement with Metrobank for 9 months, P800,000 loan starting 3 months from now. The IRG rate is at 11% and the bank quotes a premium of P4,000. Compute for the effective interest rate if the actual interest rate 3 months from now is 8%
