If a long-term note is issued with zero interest or for non-monetary consideration,
A) the debtor must first try to value the non-monetary asset(s) involved in the transaction.
B) a reasonable interest rate must be imputed.
C) the debtor always tries to create a gain with such a transaction.
D) the note is a non-monetary liability.

Question

Quizplus · Accepted Answer

According to accounting standards, if a long-term note is issued with zero interest or for non-monetary consideration, a reasonable interest rate must be imputed to properly value the transaction. The imputed interest rate is based on current market rates for similar transactions. This is to ensure that the transaction is recorded at its fair value and reflects the true economic substance.

If a Long-Term Note Is Issued with Zero Interest or for Non-Monetary