FAR 4 Module 3 Flashcards
Why do we multiply the present value factor by the payment amount when calculating the present value of a note receivable?
How should the be reported as?
This should be reported as notes receivable
How do you calculate the receivable balance for an installment note under the installment sales method?
How should a note payable issued for services (with no stated interest rate) be presented if the fair value of the services is less than the face amount of the note?
How do you calculate the receivable balance for an installment note under the installment sales method?
What is purchasing an annuity? & Why is the answer 418,250?
When a company records a note payable or receivable that includes interest, what account increases when the note is recorded?
How should the discount resulting from the determination of a note payable’s present value be reported on the balance sheet?
When is a note payable with a low or no interest rate recorded at its face value?
When determining the Acquired cost for the following, what would be the JE?
($100,000 + $10,000 – $24,868 = $85,132)
Why is interest revenue calculated based on the present value and not the face value of a note payable when determining the interest revenue earned?
How do you calculate the maximum additional amount a company can borrow given a debt-to-equity ratio requirement?
Debt to equity is
Total Debt / Total Stock holders equity
