Discounting Of notes rec'ble Flashcards
1
Q
Maturity Value
A
Principal+Interest(full term of the note)
2
Q
Interest
A
Principal times interest rate times the full term of the note
3
Q
Discount
A
Maturity value times discount rate times discount period
4
Q
Loss on NR discounting/Interest Expense
A
Net proceeds less CA of NR
- CA of NR = principal plus accrued interest rec’ble
- Net proceeds = maturity value less discount
5
Q
Non Interest Bearing Note
A
Carrying amount = principal
6
Q
Contingent liability on note receivable discounted
A
Is equal to the principal or face value of NR
7
Q
In reporting the note prior to maturity, what RATE should be used for the recording of interest expense?
A
Effective interest rate = Discount/Net proceeds
