The carrying value of a long-term note payable is computed as:
A)The future value of all remaining payments,using the market rate of interest.
B)The face value of the long-term note less the total of all future interest payments.
C)The present value of all remaining payments,discounted using the market rate of interest at the time of issuance.
D)The present value of all remaining interest payments,discounted using the current market rate of interest.
E)The face value of the long-term note plus the total of all future interest payments.

Question

Quizplus · Accepted Answer

The carrying value of a long-term note payable is the present value of all remaining payments, discounted using the market rate of interest at the time of issuance. This is because the carrying value represents the amount that would need to be paid on the note if it were to be be settled immediately. Therefore, the present value of all remaining payments gives the current fair value of the note.

The Carrying Value of a Long-Term Note Payable Is Computed