Company a Has a Note Receivable of $5,000

question 13

Multiple Choice

Company A has a Note Receivable of $5,000. The note will be collected in installments. $1,000 is due within a year and the remainder is due after a year. The classification of the note on the balance sheet is:

• A) all $5,000 is a current asset.
• B) all $5,000 is a long term asset.
• C) $1,000 is a current asset and $4,000 is a long-term asset.
• D) $4,000 is a current asset and $1,000 is a long-term asset.

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Definitions:

Fair Value

The financial return from selling an asset or the financial obligation to cover a liability in a transaction among market entities at the point of appraisal.

Goodwill

Goodwill is an intangible asset that arises when a business is purchased for more than the fair value of its net assets, representing elements of value such as brand reputation, customer relations, and intellectual property.

Fair Value

An estimate of the price at which an asset or liability could be exchanged between knowledgeable, willing parties in an arm's length transaction.

Consolidated Net Income

The total earnings of a corporation and its subsidiaries after tax, representing the total profit attributable to the parent company and its shareholders.