promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. MEASUREMENT 1. Initial Measurement: FV less TC Measurement of Fair Value Fair Value A. INTEREST BEARING • Stated Rate = Market Rate Face Amount • Stated Rate ≠ Market Rate PV of cash flows using Market Rate as of Initial Recognition B. NONINTEREST BEARING PV of cash flows using Market Rate as of Initial Recognition MEASUREMENT 2. Subsequent Measurement Interest Bearing Interest Bearing Noninterest SR = MR SR ≠ MR Bearing Interest Expense Face Amount x Carrying Amount x Carrying Amount x SR MR MR Carrying Amount Based on Present Value Present Value each Reporting remaining face (Amortization (Amortization Period amount Table) Table) Accrued Interest Based on Stated Based on Stated NONE Payable Rate Rate Discount on NONE Based on Based on Notes Payable Amortization Table Amortization Table ILLUSTRATION - 1: Acquired land January 1, 2024 Downpayment 1,000,000 Promissory Note (Face Amount) 6,000,000 Stated Rate 10% Term 3 years
Case 1: Term Note; Interest Bearing; interest is payable every
Dec. 31 ILLUSTRATION - 1: Acquired land January 1, 2024 Downpayment 1,000,000 Promissory Note (Face Amount) 6,000,000 Stated Rate 10% Installment payment every Dec. 31 2,000,000
Case 2: Serial Note; Interest Bearing; interest is payable every
Dec. 31 ILLUSTRATION - 1: Acquired land May 1, 2024 Downpayment 1,000,000 Promissory Note (Face Amount) 6,000,000 Stated Rate 10% Term 3 years
Case 3: Term Note; Interest Bearing; interest is payable every
April 30 ILLUSTRATION - 1: Acquired land October 1, 2024 Downpayment 1,000,000 Promissory Note (Face Amount) 6,000,000 Stated Rate 10% Market Rate 12% Term 3 years
Case 4: Term Note; Interest Bearing; interest is payable every
September 30 (SR ≠ MR) ILLUSTRATION - 1: Acquired land January 1, 2024 Downpayment 1,000,000 Promissory Note (Face Amount) 6,000,000 Market Rate 12% Term 3 years
Case 5: Term Note; Noninterest Bearing
ILLUSTRATION - 1: Acquired land January 1, 2024 Downpayment 1,000,000 Promissory Note (Face Amount) 6,000,000 Market Rate 12% Installment payment every Dec. 31 2,000,000
Case 6: Serial Note; Noninterest Bearing
ILLUSTRATION - 1: Acquired land August 1, 2024 Downpayment 1,000,000 Promissory Note (Face Amount) 6,000,000 Market Rate 12% Term 3 years
Roger Dale Stafford, Sr. v. Ron Ward, Warden, Oklahoma State Penitentiary at McAlester Oklahoma Drew Edmondson, Attorney General of Oklahoma, 59 F.3d 1025, 10th Cir. (1995)