When a Note Payable Is Exchanged for Property, Goods, or Services

question 16

Multiple Choice

When a note payable is exchanged for property, goods, or services, the stated interest rate is presumed to be fair unless

• A) no interest rate is stated.
• B) the stated interest rate is unreasonable.
• C) the stated face amount of the note is materially different from the current cash sales price for similar items or from current fair value of the note.
• D) any of these answers are correct.

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Definitions:

Goods in Process Inventory

Items that are currently in the production process and have not yet reached the finished goods status in a manufacturing company.