Lid Ltd made a 2-year loan of $50,000 at a 6% interest rate to Carrot Ltd on 1 July 2022. Interest is due at the end of each financial year (30 June), and the principal is due on maturity. The financial asset is classified by Lid Ltd as subsequently measured at amortized cost. Lid Ltd applies the general approach to impairment of loan receivable and has classified its loan at stage 1 from inception to maturity. The implicit interest rate is 5%. Lid estimated a 12-month expected credit loss of $5,000.

Required: Prepare the journal entries of Lid Ltd to account for the loan from initial recognition on 1 July 2022 to derecognition on 30 June 2024, assuming the loan is fully paid on maturity.

Answer rating: 100% (QA)

Stepbystep explanation Date Accounts DR CR 720221 ... View the full answer