Question

Notes receivable are reported in the current assets section of the balance sheet at the selling price at which the inventory was sold to the customers. cash (net) realizable value. total principal plus interest for the term of the loan. market value.

Answer 1

Notes receivable should be recorded at present value, since notes receivables usually carry an interest rate.

If the notes receivable is a short term note, then it can be recorded at face value since the difference between face value and present value is immaterial.

But long term should be recorded at present value which is calculated by discounting the face value of the note by the interest rate. Long term notes are usually signed for periods of more than one year.