Under current GAAP, the rate of interest assigned to non-interest-bearing notes is
A)the borrower's incremental borrowing rate
B)the lender's incremental borrowing rate
C)the interest rate for long-term government securities
D)the prime rate

Question

Quizplus · Accepted Answer

Under current GAAP, the rate of interest assigned to non-interest-bearing notes is the borrower's incremental borrowing rate. This is the rate that the borrower would have to pay to borrow funds from a third party to buy the same asset.

Under Current GAAP, the Rate of Interest Assigned to Non-Interest-Bearing