A note that does not include an interest rate should be recorded at:
A)Its face amount if the difference between face and present value is material.
B)Its present value if the difference between face and present value is material.
C)Its face amount at all times.
D)Its present value at all times.

Question

Quizplus · Accepted Answer

A note that does not include an interest rate should be recorded at its present value if the difference between face and present value is material. This is because without an interest rate, the present value of the note will differ from its face value due to the time value of money. Therefore, the present value should be recorded to accurately reflect the value of the note. If the difference between face and present value is immaterial, then the note can be recorded at its face amount.

A Note That Does Not Include an Interest Rate Should