question archive On january 1, 2020 Marseto Corporation borrows $1,000,000 on a 10%, five-year interest-bearing note
On january 1, 2020 Marseto Corporation borrows $1,000,000 on a 10%, five-year interest-bearing note
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On january 1, 2020 Marseto Corporation borrows $1,000,000 on a 10%, five-year interest-bearing note. At December 31, 2020, the fair value of the note is determined to be $975,000. Marseto irrevocably elects the fair value option in measuring the note payable. what is the carrying amount of the note payable on dec. 31, 2020
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Answer:
The carrying amount of the note payable on December 31, 2020 would be $975,000.
Step-by-step explanation
The carrying amount of the note payable on December 31, 2020, would be $975,000.
Explanation: The note would be recorded at the face value of $1,000,000. The discount on the bond payable would be recorded as $25,000 which would be amortized over the life of the note payable (10 years) under the fair value method. The carrying value of not payable would be determined by deducting the discount (under the fair value method) from the face value of the note payable.
