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I have a Credit Union that just sold a pool of auto loans.
Total loan balance outstanding is $1,400,945.22 and they are selling 90% (retaining 10%). Here is the info.
This is the calc they used:
1,400,945.22 x 90% = 1,260,850.70
purchase price 99.05 (11,978,08) Discount
Accrued interest bough 3,023.15
Purchase price total 1,251,895.77 Cash received by CU for sale
What is the journal entry to record the transaction? The credit union proposed the following entry:
DR Cash 1,251,895.77
DR Discount on loan 11,978.08
CR Loans 1,260,895.70
CR Interest Income 3,023.15
How do you amortize the discount on the loans? Over the life of each loan? Do I need to worry about anything else in this transaction? I have never dealt with a participation loan.
Total loan balance outstanding is $1,400,945.22 and they are selling 90% (retaining 10%). Here is the info.
This is the calc they used:
1,400,945.22 x 90% = 1,260,850.70
purchase price 99.05 (11,978,08) Discount
Accrued interest bough 3,023.15
Purchase price total 1,251,895.77 Cash received by CU for sale
What is the journal entry to record the transaction? The credit union proposed the following entry:
DR Cash 1,251,895.77
DR Discount on loan 11,978.08
CR Loans 1,260,895.70
CR Interest Income 3,023.15
How do you amortize the discount on the loans? Over the life of each loan? Do I need to worry about anything else in this transaction? I have never dealt with a participation loan.