Cfas Report
Cfas Report
Cfas Report
“NOTES RECEIVABLES”
Notes Receivables - are claims supported by Origination fees include compensation for
formal promises to pay usually in the forms of activities such as:
notes.
a. Evaluating the borrower’s financial
Promissory note - is an unconditional promise condition.
in writing made by one person to another, b. Evaluating guaranteed, collateral and
signed by the maker, engaging to pay on other security.
demand or at fixed determinable future time a c. Negotiating the terms of the loan.
sum certain in money to order or to bearer. d. Preparing and processing the
documents related to the loan.
Dishonored Notes- When a promissory note
e. Closing and approving the loan
matures and is note matures and is not paid, it
transaction.
is said to be dishonored. Theoretically,
dishonored notes are transferred to accounts Origination fees received from the borrower are
receivable to include, if any, interest and other recognized as unearned interest income. If the
charges. origination fees are not chargeable against the
borrower, the fees are known as “direct
INITITAL MEASUREMENT OF NOTES
origination costs.
RECEIVABLE:
TAKE NOTE: Accordingly, the origination fees
Measurement is the process of determining the
received and the direct origination costs are
monetary amounts at which the elements of
included in the measurement of the loan
the financial statements are to be recognized
receivable.
and carried in the statement of the financial
position and income statement. INITIAL MEASUREMENT OF LOAN RECEIVABLE:
Short-term notes receivable is measured at face At initial recognition, an entity shall measure a
value. loan receivable at fair value plus transaction
costs that are directly attributable to the
Long-term notes receivable:
acquisition of the financial asset.
a. Interest bearing long-term notes are
FAIR VALUE OF LOAN RECEIVABLE:
measured at face value.
b. Noninterest- bearing long term notes The fair value of the loan receivable at initial
are measured at present value. recognition is normally the transaction price,
meaning, the amount of the loan granted.
Present value is the discounted value of the
future cash flows using the effective interest TRANSACTION COSTS OF LOAN RECEIVABLE:
rate.
Transaction costs that are directly attributable
SUBSEQUENT MEASUREMENT to the loan receivable include direct origination
costs. Direct origination costs should be
Subsequent to initial recognition, long term
included in the initial measurement of the loan
notes shall be amortized cost using the
receivable.
effective interest method.
SUBSEQUENT MEASUREMENT OF LOAN
“LOANS RECEIVABLES”
RECEIVABLE:
Loans Receivable- is a financial asset arising
A loan receivable is measured at amortized cost
from a loan granted by a bank or other financial
using the effective interest method.
institutions to a borrower or client.
Origination Fees:
Loans receivable:
Part 1.
Part 2.
JPIA bank granted a loan to a borrower on January 1,
2023. The Interest on the loan is 5% payable
annually starting December 31, 2023. The loan
matures in two years on December 31, 2024. Data
related to loan are: