Nama : Sibuea, Yulia Jesica

NIM : 412001081

Kelas : Reguler Pagi-AM3C

NOTES RECEIVABLE

A. Notes Receivable Definition

A note receivable is a written promise to receive a specific amount of cash from
another party on one or more future dates. This is treated as an asset by the
holder of the note. Overdue accounts receivable are sometimes converted into
notes receivable, thereby giving the debtor more time to pay, while also
sometimes including a personal guarantee by the owner of the debtor. Notes
receivable can be separated into:
1. Notes receivable without interest ( Piutang wesel tidak berbunga ) – namely
notes receivable that have a nominal value maturity.
2. Interest bearing notes receivable ( Piutang wesel berbunga ) – namely notes
receivable with a maturity value of nominal plus interest.

B. Recognition of Notes receivable

The term recognition of notes receivable is used to describe the process of
acknowledging the existence of a notes receivable on the balance sheet of a
company. Accounting practices dictate that companies record notes receivable using
the present value of all future cash flows.
1. Note Issued at Face Value ( catatan yang diterbitkan dengan nilai nominal )
Face value is the amount of a debt obligation that is stated as payable in a
debt document. The face value does not include any of the interest or dividend
payments that may later be paid over the term of the debt instrument
2. Note Not Issued at Face Value ( catatan yang tidak diterbitkan pada nilai
nominal)
Zero-Interest-Bearing Notes. If a company receives a zero-interest-bearing
note, its present value is the cash paid to the issuer. Because the company knows
both the future amount and the present value of the note, it can compute the
 interest rate. This rate is often referred to as the implicit interest rate.
Companies record the note at the present value (cash paid) and amortize the
discount to interest revenue over the life of the note.
3. Choice of Interest Rate ( Pilihan suku bunga )
In note transactions, other factors involved in the exchange, such as the fair value
of the property, goods, or services, determine the effective or real interest rate.
But, if a company cannot determine that fair value and if the note has no ready
market, determining the present value of the note is more difficult. To estimate
the present value of a note under such circumstances, the company must
approximate an applicable interest rate that may differ from the stated interest
rate.
C. Valuation of Notes Receivable
There are certain situations where the fair market value of a note can be less than
the face value. For example, if Company A holds a note receivable from Company B,
and Company B has demonstrated financial hardship or inability to repay the note,
then the value of the note is potentially impaired. One approach to determining the
value of the note would be to value the expected cash flow from the note using an
appropriate discount rate.
 Short-Term Notes: since the interest collected will be immaterial, these notes are
recorded at face value.
 Long-Term Notes: reported on the balance sheet at the present value of the
associated cash flows. If the rate of interest on the note is higher than the market
rate, the company will record the premium paid by the customer. If the rate of
interest is lower than the market rate, the company will record the discount
provided the customer.
D. Notes Receivable for Property, Goods, or Services
In a transaction of exchanging property, goods, or services with notes receivable, the
interest rate specified is considered to be reasonable, except;
• No interest rate stated
• Interest rates declared unreasonable
• The value of the notes is materially different from the current cash sale price.
 A note receivable is a written
promise to receive a specific

Notes Receivable amount of cash from another party

Definition on one or more future dates. This

is treated as an asset by the holder
of the note.

1. Note Issued at Face Value

(catatan yang diterbitkan dengan
nilai nominal )
Recognition of Notes 2. Note Not Issued at Face Value
receivable (catatan yang tidak diterbitkan
pada nilai nominal)
3. Choice of Interest Rate ( Pilihan
suku bunga )

Notes Receivable

 Short-Term Notes: since the

interest collected will be
Valuation of Notes immaterial, these notes are
Receivable recorded at face value.
 Long-Term Notes: reported on
the balance sheet at the present
value of the associated cash flows.

In a transaction of exchanging
property, goods, or services with notes
receivable, the interest rate specified is
Notes Receivable for considered to be reasonable, except;
Property, Goods, or
 No interest rate stated
Services
 Interest rates declared
unreasonable
 The value of the notes is materially
different from the current cash sale
price.