Ch14PR - Intermediate Accounting II Chapter 14 Professional...

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Intermediate Accounting IIChapter 14 Professional Researcha)FASB ASC 835-30-05 discusses the guidelines to handle zero-interest-bearingnotes.Because the interest applied to the loan would be far under market valueand at an unreasonable rate, which is mentioned in the codification, WieCompany would have to recognize a discount on the note when recording thedebt.b)If an established exchange price is not determinable and if the note has no readymarket, the problem of determining present value is more difficult. To estimatethe present value of a note under such circumstances, an applicable interest rateis approximated that may differ from the stated or coupon rate. This process ofapproximation is called imputation, and the resulting rate is called an imputed
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