Question

What is done to record properly a transaction involving the issuance of a non-interest -bearing long-term note in exchange for property?

Short answer

The overall arrangement must be judged, and the right interest rate is to be assigned. It is conducted by ascertaining the market value of the exchanged goods or services as well as property.

Step-by-step solution

Meaning of non-interest-bearing long-term note

A non-interest-bearing note is an obligation for which there is no record needed for the borrower to pay the lender any interest rate.

Recording a transaction, including the issuance of a non-interest-bearing long-term note

The whole composition must be estimated, and a correct interest rate is to be attributed. It is done by ascertaining the actual value of the note, which is more distinctly ascertainable.