Term
| The PV of $1 dollar is the ____ of the future value of $1 |
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Definition
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Term
| When an entity must account for note receivable or payable there are 2 options |
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Definition
(1) Elect fair value option
(2) No FV option
(a) Short-term (1yr or less) Notes and A/R are recorded at maturity value
(b) longer notes recorded at PV plus or minus premium or discount |
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Term
| When a note is exchanged for cash and no other rights or privleges, the PV of the note is equivalent to |
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Definition
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Term
| When the face amount of a note does not equal the PV, the difference is |
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Definition
| either a discount or a premium |
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Term
| When a note is issued for cash and unstated rights and/or privileges, you must find |
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Definition
| (a) PV of note and (b) PV or unstated right or privilege - One of the PVs must be determined. The remaining PV is simply the difference between the face amount of the note and the PV that was determined. - pg. 355 for JEs |
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Term
| When a note is exchanged in a noncash transaction, how is the note's PV determined in absence of cash? |
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Definition
| (a) assume that the stated rate or contractual rate (interest rate) is fair, then face value is equal to PV or (b) Use (1) FMV of goods, services or property exchanged is PV (2) If (1) not known, Market value of note (3) Imputed interest rate - the debtor's incremental borrowing rate - (1) divide PV of note by face value and get rate (2) look up rate in PV of $1 and get interest rate |
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Term
| When a note has loan origination costs and fees, the lender shall |
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Definition
| defer and recognize these costs over the life of the loan only when the costs relate directly to the loan, and would not have been incurred but for the loan. Otherwise charge costs as expense. |
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Term
| When a note has non-refundable loan origination costs and fees, the both lender & borrower shall |
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Definition
| defer and recognize the nonrefundable fee over the life of the loan. The fee is assessed in the form of points, where a point is 1% of the face amount of the loan. |
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Term
| Notes on the FS are stated at their ____ . |
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Definition
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Term
| When the Fair Value Option is elected, financial liability is reported at ___. |
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Definition
| Fair value at the end of each reporting period and the resulting gain or loss is reported in earnings of the period. |
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Term
| IFRS: Borrowing costs must be capitalized if |
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Definition
| they are related to the acquisition, construction, or production of a qualifying asset. (1) QA takes a substantial period of time to get ready for intended use, eg building, inventory, ect. (2) otherwise costs are expensed |
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Term
| When the FV option is elected, any effects of discounts or premiums are |
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Definition
| removed from the FS, and the accounting rules for reporting discounts and premiums no longer apply. |
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