A note receivable should always be recorded at its present value using the borrower's incremental interest rate.

Question

Quizplus · Accepted Answer

A note receivable is typically recorded at its face value when issued. The present value calculation using the borrower's incremental interest rate is relevant when the note is issued at a discount or premium, which reflects the difference between the market interest rate and the note's stated interest rate.

A Note Receivable Should Always Be Recorded at Its Present