1.

Promissory note is unconditional promise in writing made by one person to another , signed by
the maker , engaging to pay in demand or at fixed or determinable future time a sum certain in
money to order or to bearer.
2. Initial measurement of note payable :
 If the notes payable is not designated at fair value through profit or loss shall ve
measured initially at fair value less transaction costs that are directly attributable to the
issue of the note payable. However, if the note payable is measured at fair value
through profit or loss the transaction cost are expensed immediately.( PFRS 9,
paragraph 5.1.1)
3. The fair value of note payable is equal to the present value of the future cash payment to settle
the note payable using the market rate of interest.
4. The subsequent measurement of note payable:
 At amortized cost using the effective interest method
 At fair value through profit or loss if the note payable is designated irrevocably as
measured at fair value through profit or loss.
5. The amortized cost of note payable is the amount at which the note payable is measure initially:
a. Minus principal payment
b. Plus or minus the cumulative amortization using the effective interest method of any
difference between the face amount and the present value of the note payable.
6. The present value of note payable
a. Note issued solely for cash
 When a note is issued solely for cash, the present value is equal to the cash
proceeds
b. Interest bearing note issued for property
 When a property or noncash asset is acquired by issuing a promissory note which is
interest bearing , the property or asset is recorded at purchase price. The purchase
price is assumed to the present value of the note and the fair value of the property
because the note issued is interest bearing.
c. Noninterest bearing note issued for property
 When a non-interest bearing note is issued for property, the property is recorded at
the cash price of the property . the cash price is assumed to be the present value of
the note issued.
7. The fair value option of measuring the note payable.
 Under the fair value option , any transaction is recognized as an outright expense.
There is no amortization of discount and premium on note payable. The interest
expense is recognized using the nominal or stated interest rate.
8. The treatment of the change in fair value of a financial liability under the fair value option:
a. The change in fair value attributable to the credit risk is recognized in other comprehensive
income .
b. The remaining amount of the change in fair value is recognized in profit or loss.
9. Credit risk is the risk that the issuer of the liability would cause a financial loss to the other party
by failing to discharge the obligation. It does not include market risk such as interest
risk,currency risk and price risk.
10. The reclassification of the gain or loss attributable of credit risk of the financial liability
recognized in other comprehensive income:
 The amount recognized in other comprehensive income resulting from change in
fair value attributable to credit risk shall not be subsequently transferred to profit
or loss.