12 Questions
How are notes receivable classified based on the presence of a stated interest rate?
As interest-bearing and noninterest-bearing
What is the face amount of a noninterest-bearing note composed of?
An unspecified principal and an unspecified interest
How are receivables initially recognized for measurement purposes?
At fair value plus transaction costs
Which term refers to the contracted interest rate stated on the promissory note?
Nominal rate
What does a negotiable instrument allow the holder to do?
Legally and readily sell or transfer the note to others
How do entities classify notes receivable based on the presence of a reasonable interest rate?
Long-term receivables that bear a reasonable interest rate and those that bear no interest
What is the fair value of a short-term receivable that contains a significant financing component?
Present value
How is the fair value of long-term noninterest bearing receivables determined?
Present value discounted using an imputed interest rate
What is the difference between face amount and present value in the initial recognition of receivables?
Principal element vs. interest element
Under PFRS 15, how should trade receivables without a significant financing component be measured?
At transaction price
What term is synonymous with imputed interest rate for long-term receivables?
Market rate
How is unearned interest recognized in the accounting of long-term receivables?
Initially recognized and subsequently amortized as interest revenue
Test your knowledge on long-term receivables and notes receivable, including the characteristics and classification of notes as interest-bearing or non-interest-bearing.
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