An asset is acquired using a noninterest bearing note payable for $100,000 due in two years Management records the purchase with a debit to the asset for $100,000 and a credit to notes payable for $100,000 Which of the following statements is correct Management has properly recorded the transaction Management has not considered the present value of the note in recording the asset Management should not record the asset until the note has been paid Management should record the note for more than $100,000 to account for the underlying interest

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Question: An asset is acquired using a noninterest-bearing note payable for $100,000 due in two years. Management records the purchase with a debit to the asset

An asset is acquired using a noninterest-bearing note payable for $100,000 due in two years. Management records the purchase with a debit to the asset for $100,000 and a credit to notes payable for $100,000. Which of the following statements is correct?

Management has properly recorded the transaction.
Management has not considered the present value of the note in recording the asset.
Management should not record the asset until the note has been paid.
Management should record the note for more than $100,000 to account for the underlying interest.

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