Professional Documents
Culture Documents
Proof of Cash
Computation of Book Balance
Required Allowance xx
Less: Allow. For D/A - credit bal. xx
Doubtful Account Expense xx
Initially – Fair Value plus transaction costs Others includes accounts receivable not
considered impaired for collective assessment of
Direct Origination Costs – capitalized; added to impairment
the principal amount
Decreased Unearned Interest Income Recovery of AR does not affect the balance
because the effect is offsetting
Indirect Origination Costs – expense Write off does not affect the working capital same
with recovery
Origination Fees Received – deduction from the
principal amount Dishonored Note
Increased Unearned Interest Income
Total Amount Due: Amount the entity paid
Subsequently – Amortized Cost
Example: Maturity value + Protest fee
Principal Amount xx Debited to Accounts Receivable
Origination Fees Received (xx)
Interest Income – based on the total amount due
Direct Origination Costs xx
from date of dishonored.
Initial Carrying Amount xx
PV of Principal xx
PV of Interest xx
Present Value xx
Impairment Loss
Carrying Amount of Loan minus PV of
future cash flows (original effective rate)
Carrying amount can be reduced either
directly or through the use of an allowance
account
Loss recognized in profit or loss
Interest income is charged against
allowance for loan impairment