Solution-What value should be placed on the note

What value should be placed on the note

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Reference no: EM132921068

Question - Case - Accounting for Notes Payable - Business transactions often involve the exchange of property, goods, or services for notes on similar instruments that may stipulate no interest rate or an interest rate that varies from prevailing rates.

Required -

A. When a note is exchanged for property, goods, or services, what value should be placed on the note:

1) If it bears interest at a reasonable rate and is issued in a bargained transaction entered into at arm's length? Explain.

2) If it bears no interest and/or is not issued in a bargained transaction entered into at arm's length? Explain.

B. If the recorded value of a note differs from the face value,

1) How should the difference be accounted for? Explain.

2) How should this difference be presented in the financial statements? Explain.

Reference no: EM132921068

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What value should be placed on the note

Reference no: EM132921068

Reference no: EM132921068

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