Long term note issued at face value long term note

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Unformatted text preview: at Present Value of expected cash flows (same treatment as Bonds Payable – TVM is a factor here) Interest Rates Stated rate = Market rate Face Value Stated rate > Market rate Premium Stated rate < Market rate Chapter 7-40 Note Issued at Discount LO 6 Explain accounting issues related to recognition of notes receivable. Long-Term Note Issued at FACE VALUE Long-Term Note Issued at FACE VALUE Long-Term FACE Long-Term FACE Illustration: Bigelow Corp. lends Sand Imports $10,000 in exchange for a $10,000, 3­ year note bearing interest at 10 percent annually. The market rate of interest for a note of similar risk is also 10 percent. How does Bigelow record the receipt of the note? (since SR = MR we issue note at FACE VALUE) i = 10% $10,000 Principal $1,000 0 Chapter 7-41 1,000 1 2 n=3 1,000 Interest 3 4 LO 6 Explain accounting issues related to recognition of notes receivable. Long-Term Note Issued at FACE VALUE Long-Term Note Issued at FACE VALUE Long-Term FACE Long-Term FACE PV of Interest $1,000 x 2.48685 = $2,487 Interest Received Chapter 7-42 Factor Present Value LO 6 Explain accounting...
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