The Carrying Value of a Long-Term Note Payable

question 162

Multiple Choice

The carrying value of a long-term note payable:

• A)Is computed as the future value of all remaining future payments,using the market rate as interest.
• B)Is the face value of the long-term note less the total of all future interest payments.
• C)Is computed as the present value of all remaining future payments,discounted using the market rate of interest at the time of issuance.
• D)Is computed as the present value of all remaining interest payments,discounted using the note's rate of interest.
• E)Decreases each time period the discount on the note is amortized.

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Definitions:

Insurance Expense

The cost reported by a company for premiums it pays on its insurance policies, covering risks such as property damage, theft, or liability.

Accumulated Depreciation

The total amount of depreciation expense that has been charged against a fixed asset since it was put into use, representing the wear and tear over time.

Contra-Asset Account

An account that offsets or reduces the balance of its related asset account, such as accumulated depreciation reducing the carrying value of fixed assets.

Liability Account

An accounting record that represents a company's legal debts or obligations that arise during business operations.