The carrying value of a long-term note payable:
A)Is computed as the future value of all remaining future payments, using the market rate of interest.
B)Is the face value of the long-term note less the total of all future interest payments.
C)Is computed as the present value of all remaining future payments, discounted using the market rate of interest at the time of issuance.
D)Is computed as the present value of all remaining interest payments, discounted using the note's rate of interest.
E)Decreases each time period the discount on the note is amortized.

Question

Quizplus · Accepted Answer

The carrying value of a long-term note payable is the present value of all remaining future payments, discounted using the market rate of interest at the time of issuance. This is because the carrying value represents the current value of the obligation to be paid in the future, considering the time value of money. The market rate of interest is used to discount the future payments because it represents the return an investor could expect to earn on a similar investment in the current market.

The Carrying Value of a Long-Term Note Payable