If the fair value option is elected,the carrying value of a note receivable would reflect general changes in interest rates and changes in the creditworthiness of the lender.

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When the fair value option is elected, the carrying value of a note receivable would be adjusted to reflect changes in interest rates and changes in the creditworthiness of the borrower, which would be reflected in the fair value of the note receivable. This is because fair value accounting requires assets and liabilities to be measured and reported at their estimated market value, which can fluctuate based on changes in interest rates, credit risk, and other factors. Therefore, the carrying value of a note receivable under fair value accounting would be more sensitive to changes in market conditions than under historical cost accounting.

If the Fair Value Option Is Elected,the Carrying Value of a Note