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When a Company Is the Recipient of a Donated Asset

question 139

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When a company is the recipient of a donated asset, the account credited may be a


Definitions:

Effective Interest Rate

A measure of the real cost of borrowing that takes into account the effect of compounding interest in addition to the nominal rate.

Compensating Balance

Compensating Balance is a minimum bank account balance that a borrower must maintain as part of a loan agreement, often used by banks as a requirement for extending a loan.

Interest Rate

The percentage of principal charged by the lender for the use of its money or the return earned on deposited funds.

Effective Interest Rate

The actual return on an investment, taking into account the effect of compounding interest.

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