Ch14PR - Intermediate Accounting II Chapter 14 Professional Research a FASB ASC discusses the guidelines to handle zero-interest-bearing notes Because

Ch14PR - Intermediate Accounting II Chapter 14 Professional...

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Intermediate Accounting II Chapter 14 Professional Research a) FASB ASC 835-30-05 discusses the guidelines to handle zero-interest-bearing notes. Because the interest applied to the loan would be far under market value and at an unreasonable rate, which is mentioned in the codification, Wie Company would have to recognize a discount on the note when recording the debt. b) If an established exchange price is not determinable and if the note has no ready market, the problem of determining present value is more difficult. To estimate the present value of a note under such circumstances, an applicable interest rate is approximated that may differ from the stated or coupon rate. This process of approximation is called imputation, and the resulting rate is called an imputed

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