On October 1, 2021, an entity received a one-year notes receivable bearing interest at

the market rate. The face amount of the notes receivable and the entire amount of the
interest are due on September 30, 2022. The interest receivable on December 31, 2021
would consist of an amount representing three months of accrued interest income. 
Group of answer choices

True

False
 
Flag question: Question 2
Question 21 pts
On July 1, 2021, an entity obtained a 2-year 8% note receivable for services rendered. 
At that time, the market rate of interest was 10%.  The face amount of the note and the
entire amount of interest are due on the date of maturity.   Interest receivable on
December 31, 2021 is 4% of the face amount of the note. 
Group of answer choices

True

False
 
Flag question: Question 3
Question 31 pts
An entity uses the installment sales method to recognize revenue.  Customers pay the
installment notes in 24 equal monthly amounts which include 12% interest.  The
installment notes receivable balance  6 months after the sale is equal to the present
value of the remaining monthly payments discounted at 12%. 
Group of answer choices

True

False
 
Flag question: Question 4
Question 41 pts
On July 1, 2020, an entity received a 1-year note receivable bearing interest at market
rate.  The face amount of the notes receivable and the entire amount of the interest are
due in one year.   The interest receivable account would show a balance on July 1 and
December 31.
Group of answer choices

True

False
 
Flag question: Question 5
Question 51 pts
On July 1, 2020, an entity received a 1-year note receivable bearing interest at the
market rate.  The face amount of the note receivable and the entire amount of the
interest are due in 1 year.  When the note receivable was recorded on July 1, interest
receivable was debited. 
Group of answer choices

True

False
 
Flag question: Question 6
Question 61 pts
On August 15, an entity sold goods for which it received a note bearing the market rate
of interest on that date.  The 4-month note was dated July 15.  Note principal, together
with all interest, is due November 15.  When the note was recorded on August 15,
Interest Revenue was increased. 
Group of answer choices

True

False
 
Flag question: Question 7
Question 71 pts
On July 1, 2020, an entity received a 1-year note receivable bearing interest at the
market rate.   The face amount of the note receivable and the entire amount of the
interest are due on June 30, 2021.  On December 31, 2020, the entity reports in the
statement of financial position interest receivable for the interest accruing in 2020. 
Group of answer choices

True
False
 
Flag question: Question 8
Question 81 pts
The amortized cost of loan receivable is the amount at which the loan receivable is
measure initially minus principal repayment, plus or minus the cumulative amortization
of any difference between the initial amount recognized and the principal maturity
amount, minus reduction for impairment. 
Group of answer choices

True

False
 
Flag question: Question 9
Question 91 pts
Subsequent to initial recognition, a loan receivable shall be measured at amortized cost
using the straight line method. 
Group of answer choices

True

False
 
Flag question: Question 10
Question 101 pts
In calculating the carrying amount of loan receivable, the lender adds to the principal,
direct origination cost, indirect origination cost and origination fee charged to borrower. 
Group of answer choices

True

False
 
Flag question: Question 11
Question 111 pts
If there is evidence that an impairment loss on loan receivable has been incurred, the
loss is equal to the excess of the carrying amount of the loan receivable over the
present value of the cash flows related to the loan. 
Group of answer choices

True

False
 
Flag question: Question 12
Question 121 pts
When the stated rate of interest exceeds the effective rate, the present value of the note
receivable will be less than its face value
Group of answer choices

True

False
 
Flag question: Question 13
Question 131 pts
The International Accounting Standard Board requires that companies assess their
receivables for impairment each reporting period and begin the impairment assessment
by considering whether objective evidence indicates that one or more loss events have
occurred.
Group of answer choices

True

False
 
Flag question: Question 14
Question 141 pts
The International Accounting Standard Board requires that when performing an
impairment assessment, all receivables that are individually significant should be
considered for impairment separately.
Group of answer choices

True

False
 
Flag question: Question 15
Question 151 pts
Which of the following statements is incorrect regarding the classification of accounts
and notes receivable?

A. Segregation of the different types of receivables is required if they are

material.
B. Disclose any loss contingencies that exist on the receivables.
C. Any discount or premium resulting from the determination of present
value in notes receivable transactions is an asset or liability respectively.
D. Valuation accounts should be appropriately offset against the proper
receivable accounts.

Group of answer choices

D
 
Flag question: Question 16
Question 161 pts
Equestrain Roads sold P50,000 of goods and accepted the customer’s P50,000 10%
1-year note in exchange. Assuming 10% approximates the market rate of return, how
much interest would be recorded for the year ending December 31 if the sale was made
on June 30?

A. P0
B. P1,250
C. P2,500
D. P5,000

Group of answer choices

C
D
 
Flag question: Question 17
Question 171 pts
Lester Company received a seven-year zero-interest-bearing note on February 22,
2018, in exchange for property it sold to Porter Company. There was no established
exchange price for this property and the note has no ready market. The prevailing rate
of interest for a note of this type was 7% on February 22, 2018, 7.5% on December 31,
2018, 7.7% on February 22, 2019, and 8% on December 31, 2019.  What interest rate
should be used to calculate the interest revenue from this transaction for the years
ended December 31, 2018 and 2016, respectively?

A. 0% and 0%
B. 7% and 7%
C. 7% and 7.7%
D. 7.5% and 8%

Group of answer choices

D
 
Flag question: Question 18
Question 181 pts
What is imputed interest?

A. Interest based on the stated interest rate

B. Interest based on the implicit interest rate
C. Interest based on the average interest rate
D. Interest based on the coupon rate

Group of answer choices

C
D
 
Flag question: Question 19
Question 191 pts
Assuming that the ideal measure of short-term receivables in the statement of financial
position is the discounted value of the cash to be received in the future, failure to follow
this practice usually does not make the statement of financial position misleading
because

A. most short-term receivables are not interest-bearing.

B. the allowance for uncollectible accounts includes a discount element.
C. the amount of the discount is not material.
D. most receivables can be sold to a bank or factor.

Group of answer choices

D
 
Flag question: Question 20
Question 201 pts
Which of the following statement is incorrect regarding how the IASB requires that the
impairment assessment be performed?

A. Receivables that are individually significant should be considered for

impairment separately, if impaired, the company recognizes it.
B. Receivables that are not individually significant are assessed individually.
If impaired, the company recognizes it.
C. Any receivable individually assessed that is not considered impaired
should be included with a group of assets with similar credit-risk
characteristics and collectively assessed for impairment.
D. Any receivables not individually assessed should be collectively
assessed for impairment.

Group of answer choices

A
B

1. T
2. T
3. T
4. T
5. F
6. F
7. T
8. T
9. F
10. T
11. T
12. F
13. T
14. C
15. B
16. C
17. B
18. A
19. B
20. D