ABC Limited borrows $$100,$500 from a bank on the following terms: arrangement fees of $$2,000$ are charged by the bank and deducted from the initial proceeds on the loan; interest is payable at $5\%$ for the first three years of the loan and then increases to $7\%$ for the remaining two years of the loan;the full balance of $$100,\mathrm{}550$ is repaid at the end of year $5$  

 

Require

a$.$What interest should be recognised in the statement of comprehensive income for each year of the loan?

b$.$ If Isabelle Limited repaid the loan after three years for $$100,000,$ what gain or loss would be recognised in the statement of comprehensive income?

Answer rating: 100% (QA)

a Interest Expense for Each Year Loan Details Loan Amount 100500 Arrangement Fee 2000 Interest Rate ... View the full answer