Accounting for Long - Accounting for Long-Term Notes...

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Accounting for Long-Term Notes Payable The use of notes payable in long-term debt financing is quite common. Long-term notes payable are similar to short-term interest-bearing notes payable except that the terms of the notes exceed one year. In periods of unstable interest rates, lenders may tie the interest rate on long-term notes to changes in the market rate for comparable loans. Examples are the 8.03% adjustable rate notes issued by General Motors and the floating-rate notes issued by American Express Company. A long-term note may be secured by a document called a mortgage that pledges title to specific assets as security for a loan. Individuals widely use mortgage notes payable to purchase homes, as do many small and some large companies to acquire plant assets. For example, at one time approximately 18% of McDonald's long-term debt related to mortgage notes on land, buildings, and improvements. Helpful Hint
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Accounting for Long - Accounting for Long-Term Notes...

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