[Biff-1955-Tannen]

Can somebody explain to me how this is a DIRECT reduction from the face amount of the note? How is a contra account a direct reduction? When I think of a direct reduction, I think of something like the FV Option of reporting investments, where instead of using a FV adjustment account, you debit or credit directly to the investment…

The discount resulting from the determination of a note payable’s present value should be reported on the balance sheet as:

D.

a direct reduction from the face amount of the note.

Cash or other asset XX

Discount or Note payable X

Note Payable XXX

This note would be reported on the balance sheet as follows:

Note Payable XXX

Less: Discount X

—

Notes Payable (net of discount) XX

The discount is reported as a direct reduction from the face amount of the note.

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[Biff-1955-Tannen]

Nobody? 🙁

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[monikernc]

I know you don't like it when i go to the source but read the last paragraph above ‘contact information'

https://www.fasb.org/jsp/FASB/FASBContent_C/ProjectUpdatePage&cid=1176164371065

It seems it is the correct term.

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AUD 10/30/15 93
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REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
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[Biff-1955-Tannen]

Thanks for the post I appreciate it. This terminology doesn't make a bit of sense to me, but I'll just run with it for the exam I guess. I found the webpage title very laughable though.

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[monikernc]

There have been changes on bonds since i left school a year ago and didn't see on my far exam – this may be one of them.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[Author]

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