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Accounting

A debt instrument with no ready market is exchanged for property whose fair market value is presently indeterminable. When such a transaction takes place, the present value of the debt instrument must be approximated using an imputed interest rate.

It should not be recorded on the books of either party until the fair market value of the property becomes evident. The board of directors of the entity receiving the property should guess a value for the property that will serve as a basis for the transaction. The directors of both entities involved in the transaction could negotiate a value to be assigned to the property.

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M9156200

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