18_Trade_Notes_Rec-1 - Nominal interest rate = market...

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Click to edit Master subtitle style Trade Notes Receivable Accountancy 301 Professor Clifton Brown 18 October 27, 2010
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Asset attributes (element  definition) Probable future  economic benefits Obtained/con- trolled by the entity Result of past  transactions/ events Relevant/reliable measurement attribute Present Value (FCF) Estimation issues Future cash flows Credit risk Interest rate
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Interest rates Nominal  interest rate Market  interest rate Drives the periodic  interest payments Drives the note’s  market value Contractual rate Variable Fixed or  Variable Effective rate
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Market vs. nominal interest  In many instances, at the date of issuance:
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Unformatted text preview: Nominal interest rate = market interest rate In some instances, at the date of issuance: Nominal interest rate market interest rate What is the accountant’s problem in such instances? FedEx Corp. In question 2, Boeing wrote the trade note at discount Nominal i = 6% Market i = 8% Why do you think they did this? Next class – Monday, Nov 1 Midterm Exam 2 – changed to Monday, Nov 8 Manufacturing inventories Readings Revsine Chapter 9 (part) Maher et al Chapter 3 API Electronics Presentations Teams 6 & 7 Write ups Due Thursday...
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This note was uploaded on 06/05/2011 for the course ACCT 301 taught by Professor Yueli during the Spring '10 term at University of Illinois, Urbana Champaign.

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18_Trade_Notes_Rec-1 - Nominal interest rate = market...

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