Module 5

Loans Receivable /Financing and Assignment

Financing and Assignment

AEFAR 3
INTERMEDIATE ACCOUNTING
PART 1

to your second module!

This module is a combination of

synchronous & asynchronous learning
and will last for two - three weeks
Course Coach

COLLEGE OF BUSINESS AND

ACCOUNTANCY C_Outline

Carmelita J. Mercado

October 25-, 2021

Date Initiated
November 10, 2021
Date of Completion

San Mateo Municipal College

Gen. Luna St. Guitnang Bayan I, San Mateo, Rizal
Tel. No. (02) 997-9070
www.smmc.edu.ph
 SAN MATEO MUNICIPAL COLLEGE
General Luna St., Guitnang Bayan I, San Mateo, Rizal
Tel. No. (02) 997-9070
www.smmc.edu.ph

MODULE 5

AEFAR 3

LOANS RECEIVABLE / FINANCING AND ASSIGNMENT

MODULE SCHEDULE (This module is good for 2 weeks )
i. Synchronous Meeting: October 25 - November 10, 2021
ii. Asynchronous Meeting: (Individual Assignment with Peer Collaboration)

LEARNING OBJECTIVES
At the end of the module, you are expected to:
1. describe the nature of receivables;
2. classify receivables according to source;
3. state the applicable requirements of the IFRS’s relating to receivables
4. apply the recognition and measurement principles in IFRS 9 Financial Instruments and IFRS 15 Revenue from
Contracts with Customers relating to receivables ;
5. formulate entries for transactions affecting notes and accounts receivable;
6. prepare entries to account for different forms of receivable financing;
7. present and classify receivables in the statement of financial position; and
8. identify the required disclosures for receivables in the financial statements.

INFORMATION INPUTS

LOANS RECEIVABLE – is a financial asset arising from a loan granted by a bank or other financial institutions to
a borrower or client.
The term of the loan may be short-term but in most cases the repayment periods cover several years.
At Initial recognition, an entity shall measure a loan receivable at fair value plus transaction costs that are directly
attributable to the acquisition of the financial asset. The fair value of the loan receivable at initial recognition is
normally the transaction price, meaning the amount of the loan granted . The transaction costs that are directly
attributable to the loan receivable include direct origination costs. However, indirect origination costs should be
treated as outright expense
PFRS 9 paragraph 4.1.2, provide that if the business model in managing financial asset, is to collect contractual
cash flows on specified dates and the contractual cash flows are solely payments of principal and interest, the
financial asset shall be measured at amortized cost.
Accordingly, a loan receivable is measured at amortized cost using the effective interest method.
The “amortized cost” is the amount at which the loan receivable is measured initially.

 Minus the prepayment

 Plus or minus the cumulative amortization of any difference between the initial carrying amount and the
principal maturity amount.
 Minus reduction for impairment or uncollectibility

If the initial amount recognized is lower than the principal amount, the amortization of the difference is added to
the carrying amount.
I the initial amount recognized is higher that the principal amount, the amortization of the difference is deducted
from the carrying amount..
The fees charged by the bank against the borrower for the creation of the loan are known as “Origination fees”
Origination fees include compensation for activities such as: