Chi Consulting purchased a new computer system and in return signed a three-year $30,000 non-interest-bearing note payable.An investigation by the company's accountant revealed that similar notes have market rates of interest around 8%.At what value should the note payable be initially recorded on Chi's financial statements?
A)$30,000
B)$10,000
C)$25,771
D)$23,815

Question

Quizplus · Accepted Answer

The note payable should be recorded at its present value, which is the amount that would be paid today to settle the note. The present value of a $30,000 note payable over three years at an 8% interest rate is $23,815.

Chi Consulting Purchased a New Computer System and in Return