Long-Term Liabilities Flashcards
1
Q
How can you compute the total interest expense over the life of a non-interest bearing note?
A
Impute the market rate by the PV of the note, which is the effective interest rate method.
2
Q
What is the exception for interest imputed on a non-interest bearing financial instrument?
A
If the transaction is with customers or suppliers in the normal course of business and trade term do not exceed one year, interest is not imputed.
3
Q
How to calculate the total interest revenue or accretion on a notes receivable?
A
The difference between the future cash flows minus the PV of the principal i
