When an interest-bearing note payable is given to purchase an asset, the face amount of the note and the recorded cost of the assets received will always be the same.

Question

Quizplus · Accepted Answer

The face amount of the note payable may include interest expense, while the recorded cost of the asset does not include interest. Therefore, the two amounts may not always be the same.

When an Interest-Bearing Note Payable Is Given to Purchase an Asset