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sdas [7]
3 years ago
11

A note payable was issued in payment for services received. The services had a fair value less than the face amount of the note

payable. The note payable has no stated interest rate. How should the note payable be presented in the statement of financial position?
Business
1 answer:
Leokris [45]3 years ago
3 0

Answer:

The note payable will be presented in the financial statement at the face amount minus a discount calculated at the imputed interest rate.

Explanation:

The imputed rate is the rate at which the present value of the face amount of the note will be equal to the amount at which it is originally recorded.  

Notes issued or received in exchange for goods or services that do not bear interest at a fair rate are reported at an amount equal to the fair value of the note, the fair value of the goods or services, or the present value of the note using a fair interest rate, whichever is more readily determinable.  

The difference between the recorded amount and the face value is considered a discount and the applicable interest rate regardless of which method is used to value the note.

Because of this, the note is reported at its face amount minus a discount calculated at the imputed interest rate.

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Toys Unlimited has the following cost data available. Direct Materials are $99 per unit. Direct Labor is $55 per unit. Variable
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Answer:

c. $229

Explanation:

To compute the total absorption cost per unit we do the following,

Absorption of fixed costs = Fixed costs / units produced

Absorption cost = 200,000 / 4000 = $50/unit

Total cost of each individual unit = 99 + 55 + 25 + 50 = $229

This includes direct material, direct labor, manufacturing overhead and the fixed absorption cost.

With absorption costing we take all the goods produced in a period as denominator for the Fixed costs.

Hope that helps.

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4 years ago
If Congress passed a tax increase at the request of the president to reduce the budget deficit, but the Fed held the money suppl
kifflom [539]

If Congress passed a tax increase at the request of the president to reduce the budget deficit, but the Fed held the money supply constant, then the two policies together would generally lead to lower income and a lower interest rate.

<h3>What is budget deficit?</h3>

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Inflation, or the ongoing rise in prices, is one of the main threats posed by a budget deficit. A budget deficit in the US may lead to the Federal Reserve releasing more money into the economy, which fuels inflation. Year after year, ongoing budget deficits may result in inflationary monetary policy.

The relationship between deficits and interest rates is more clearly demonstrated when the deficits are used to fund government spending than by tax reductions. If tax cut recipients save part of the money they receive from the tax cut, the impact of the tax cut on interest rates should be minimized.

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