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

question 88

Multiple Choice

When a note payable is issued for property, goods, or services, the present value of the note should preferably be measured by

• A) the present value of the property, goods or services.
• B) the fair value of the property, goods, or services.
• C) the fair value of the debt instrument.
• D) the present value of the debt instrument.

---

Definitions:

Percentage-Of-Completion

An accounting method used to recognize revenue and expenses of long-term projects proportionally with the degree of completion.

Construction In Progress

An account representing the costs associated with constructing long-term, fixed assets that are not yet completed and ready for use.

Costs Incurred

Represents the expenses that a company or individual has realized in the process of conducting business or carrying out a specific activity.

Obligations

Financial or legal responsibilities, such as debts or contractual agreements, that an entity is required to fulfill.