The Maturity Date of a Note Receivable

question 124

Multiple Choice

The maturity date of a note receivable:

• A) Is the day of the credit sale.
• B) Is the day the note was signed.
• C) Is the day the note is due to be repaid.
• D) Is the date of the first payment.
• E) Is the last day of the month.

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Definitions:

Fair Market Value

The price at which an asset would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Minimum Lease Payments

Minimum lease payments are the lowest amount that a lessee is obligated to pay over the lease term, including fixed payments, variable rent, guarantees, and residual value assurances.

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds on the day of the lease transaction, used in lease accounting.

Lessor's Implicit Rate

The interest rate in a lease that yields the same net investment in the lease as the present value of the minimum lease payments and any unguaranteed residual value.