Question: On 1 Jan 2018, Entity A makes a four-year loan of $10,000 to Entity B.The fixed interest on the loan is 6%, the same as

On 1 Jan 2018, Entity A makes a four-year loan of $10,000 to Entity B.The fixed interest on the loan is 6%, the same as the effective rate of interest.Interest is received at the end of each year.

On 1 Jan 2021, Entity B tells Entity A that it isin significantfinancial difficulties. At this time the current market interest rate is 8%.

Entity A estimates that it will receive no more interest from Entity B.It also estimates that only $6,000 of the loan will be repaid on the redemption date.

REQUIRED

If the four-year loan is measured atamortisedcost, evaluate the interest income of the four-year loan which recognized in the Statement of Profit or Loss for the year of 2021.

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