When the market interest rate on a short-term note receivable is greater than the stated rate, ________. Group of answer choices the present value of the note is greater than its stated value the stated value of the note is greater than its face value the stated value of the note is less than its face value the present value of the note is less than its face value

When the market interest rate on a short-term note receivable is greater than the stated rate, ________. Group of answer choices the present value of the note is greater than its stated value the stated value of the note is greater than its face value the stated value of the note is less than its face value the present value of the note is less than its face value

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 3Q

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Similar questions

What is the expected result of a zero-interest-bearing note that is sold today for less than face value? a.) It has implicit interest equal to the difference between the face value and the present value. b.) It has an implicit premium paid equal to the difference between the face value and the present value. c.) It has a negative interest rate and will not generate revenue. d.) It has an implicit discount equal to the amortization of the sum of the face value and present value.
The interest on a non-interest bearing note is equal to a. The excess of the face value over the present value. b. The excess of the present value over the face value. c. The excess of the present value over the market value of the note. d. Zero.
True or false When a non-interest-bearing note has been issued at a discount or premium and is fully amortized, on maturity date, the note is not equal to its face value.
TRUE OR FALSE: An implicit or imputed rate of interest must be used when long-term notes are issued at a stated rate of interest that is materially different from the market rate of interest.
Which of the following is true? Short-term notes payable should be discounted at its present value, more so, if it constitutes a financing transaction and the imputed interest can be measured without undue cost or effort. Transaction costs of issuing financial liabilities are expensed outright. The present value of a serial note's principal is computed by using the PV of 1 as the present value factor. Notes payable are obligations supported by creditor's promissory notes.
Explain the initial measurement of,a. short-term notes receivableb. interest bearing long-term notesc. noninterest bearing note receivabled. interest bearing below market rate long-term notes
A long-term note payable with no stated rate of interest should be reported separately from other short-term notes payable recorded at the face value discounted to its present value recorded at maturity value
Which of the following is not true about the discount on short-term notes payable? a. The Discount on Notes Payable account should be reported as an asset on the balance sheet. b. When there is a discount on a note payable, the effective interest rate is higher than the stated discount rate. c.The Discount on Notes Payable account has a debit balance. d. Discount on Notes Payable is a contra account to Notes Payable.
Notes receivable should be stated at amortized cost which is equivalent to its present value which may be its face or discounted value for long term interest bearing and or long term interest bearing with unreasonably low interest rate. TRUE OR FALSE
Please clarify the difference between the stated interest rate on notes receivable and the market interest rate, as well as premiums and discounts...? I'm stumped as to why that notion is eluding me.
The proceeds of a discounted note are equal to the face value of the note. True False
A discounted note will produce an effective rate which is different than the stated rate. Why does this occur?