The journal entry to recognize the impairment of a note receivable includes a

Question

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Recognizing the impairment of a note receivable means that it is unlikely that the full amount will be collected. This is considered a loss for the company, so Bad Debt Expense should be debited to reflect the decrease in asset value. The credit to Notes Receivable reflects the reduction in the value of the asset. Interest Expense and Interest Revenue are not relevant in this scenario.

The Journal Entry to Recognize the Impairment of a Note