Notes Recievable

Question 1

What are the two types of NR?

Answer 1

Interest and Non interest bearing

Question 2

NR are recorded at fair value. TF

Answer 2

False. NR are recorded at present value of future cash flows.

Question 3

What columns are needed to set up the effective interest table?

Answer 3

Date, Cash Recieved, Int Recieved, D/P Amortized, Unamortized D/P, Carrying Value

Question 4

Interest Receivable is equated using the stated rate of interest x the carrying value. TF

Answer 4

False. Market rate.

Question 5

Cash received is equated by multiplying the stated rate of interest by the face amount of the note. TF

Answer 5

True

Question 6

The discount or premium is the difference between the interest receivable and the cash received. TF

Answer 6

True

Question 7

A note receivable, due in 9 months will be reported at present value of future cash flows. TF

Answer 7

False, any note due within a year is recorded at its FACE VALUE