A Debt Instrument with No Ready Market Is Exchanged for Property

question 127

Multiple Choice

A debt instrument with no ready market is exchanged for property whose fair value is currently indeterminable. When such a transaction takes place

• A) the present value of the debt instrument must be approximated using an imputed interest rate.
• B) it should not be recorded on the books of either party until the fair value of the property becomes evident.
• C) the board of directors of the entity receiving the property should estimate a value for the property that will serve as a basis for the transaction.
• D) the directors of both entities involved in the transaction should negotiate a value to be assigned to the property.

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