Fair Valuation of loan at below EIR

Sir/Ma'am,
my client has a loan from its parent company @ 10% the interest of which is compounded quarterly and entire amount including interest is to be paid after 3 years. EIR is 12%.
Can you guide me with the Journal entries to take into effect this fair valuation.
Thank You
Replies (2)
Assuming loan amount 100000.
First calculate the fair value of loan which will be:
(100000×(1.025)^12))/1.12^3 = 95726.

Diff 100000-95726 = 4274 will be treated as income.

Then take loan anount Rs. 95726 and charge interest @ 12% on such loan for three years.

In fact, no difficulties will arise if you once figure out how to apply for a loan on the Internet. To begin with you should go to the website of the service that provides loans online and calculate the necessary term and amount of the loan at this page. The amount and term of financing are key that affect the final cost of your loan. This is followed by the process of filling out a registration application. It is not complicated, but it will be necessary for him to take about 15 minutes by filling out a number of contact and passport data. In the process of filling out a loan application, you may also be asked the phones of your friends or colleagues. This is done in order to protect their customers if they suddenly stole their passport so that could not get a loan for another person. After filling out the application, you will have the opportunity to sign the contract online. After signing the contract, money is transferred immediately to the card.

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