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Unformatted text preview: able. Long-Term Note Issued at a DISCOUNT Long-Term Note Issued at a DISCOUNT Long-Term DISCOUNT Long-Term DISCOUNT NOTE: Effective interest method is used to amortize the discount. Illustration 7-14 Chapter 7-49 LO 6 Explain accounting issues related to recognition of notes receivable. Long-Term Note Issued at a DISCOUNT Long-Term Note Issued at a DISCOUNT Long-Term DISCOUNT Long-Term DISCOUNT Journal Entries for Interest-Bearing Note Dat e Account Tit le Be g . y r . 1 No te s r e c e iva b le Debit Credit 10 ,0 0 0 Dis c o unt o n no te s r e c e iva b le Ca s h End . y r . 1 4 8 0 9 ,5 2 0 Cash Discount on notes receivable Interest revenue 1,000 142 1,142 ( $ 9 ,5 2 0 x 12 % ) Chapter 7-50 LO 6 Explain accounting issues related to recognition of notes receivable. Valuation of Notes Receivable Valuation of Notes Receivable Short-Term reported at Net Realizable Value (NRV ) (same as accounting treatment of A/R). Long-Term ­ FASB requires companies disclose not only their cost but also their fair value in the notes to the financial statements. Chapter 7-51 Fair Value O...
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