INTERMEDIATE ACCOUNTING 2 / FA LIABILITIES OLCAE05- ACTIVITY 3 1. Loan Origination Costs and Fees - A loan origination fees are the fees that the lender charge to the borrower to process the loan or it is the compensation we pay to the lender in exchange to the service they did to us, it is not necessarily but it depends to the lender. The fees is about 0.75% to 1.5% of the total loan amount, so the higher you loan to the lender, the higher the fees is. One of the example of this is th mortgage loan, mortgage loan is 1% of the total amount of the mortgage. 2. Disclosure - T is necessary to the business transaction to be reported at the end of accounting period, every account has an recognition criteria, but if the accounts doesn’t meet the recognition criteria it must be disclose. Business should report all the necessary information in their financial statements, so that the users who are able to read the financial information are in a better position to make important decisions regarding the company. 3. IAS23 - Under International Standard Accounting 23 (IAS23) describe the Borrowing cost were it is interest and other costs incurred by an entity in connection with the borrowing of funds. Borrowing costs may include: interest expense on financial liabilities or lease liabilities computed using the effective interest method, and Exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs 4. Qualifying Assets - It is a type of assets that is necessarily takes times or period to fully ready for its intended use for economic use for the business, for example construction of rental house or condominium, it take time to fully operate and use to generate profit. 5. Cashless Payment - Cashless payment is simple a payment transaction without the presence of physical cash or cold cash, instead payment with the check, e-cash, card and anything not relating to physical cash that can compensate the other party. Cashless payments eliminate several business risks at a time such as theft of cash by employees, counterfeit money, and robbery of cash. Moreover, it also reduces costs of security, withdrawing cash from bank, transporting, and counting.
