Assets purchased on long-term credit contracts should be recorded at the present value of the consideration exchanged.

Question

Quizplus · Accepted Answer

According to the accounting principles, assets purchased on long-term credit contracts should be recorded at the present value of the consideration exchanged. This is because the payment will be made in future periods and the amount due will have to be discounted to reflect the time value of money.

Assets Purchased on Long-Term Credit Contracts Should Be Recorded at the Present