Hoover Company Has a Long-Term Note Payable for $300,000 on January

question 10

Multiple Choice

Hoover Company has a long-term note payable for $300,000 on January 1, 2012. Each month the company is required to pay $75,000 on the note. How will this note be reported on January 31, 2012?

• A) Long-term liability, $300,000
• B) Long-term liability, $225,000
• C) Current liability, $75,000; long-term liability, $225,000
• D) Current liability, $225,000; long-term liability, $75,000

---

Definitions:

Opportunity Costs

Missing out on possible advantages from various alternatives upon deciding on one.

Sunk Cost

A cost that has already been incurred and cannot be recovered or refunded, and thus should not influence future financial decisions.

Book Value

Book value is the net value of a company's assets found on its balance sheet, calculated as total assets minus total liabilities and intangible assets.

After-Tax Salvage

The net value of an asset after subtracting taxes associated with its sale or disposal.