The Carrying Amount of a Long-Term Note Payable

question 20

Multiple Choice

The carrying amount of a long-term note payable:

• A) Is computed as the future value of all remaining future payments, using the market rate of 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:

Deductions

Amounts subtracted from gross income to determine taxable income, including expenses, exemptions, and allowances.

Long-Term Liabilities

Financial obligations of a business that are due more than one year in the future.

Current Liabilities

Debts or obligations that are due to be paid within one year or within the normal operating cycle.

Discount

A reduction applied to the regular price of products or services.