Ch14PR - Intermediate Accounting II Chapter 14 Professional...

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