Which is true about using a note with stated interest rate vs. a note without stated interest rate to buy a machine? Assume that both types of notes have the same face amount, due date of principal and interest, and explicit & implicit interest rate. 1. Both an interest-bearing note and a noninterest-bearing note result in the same amount of liability. 2. Using a noninterest-bearing note will result in a smaller recorded amount of PPE. 3. To record interest expense on a noninterest-bearing note, an entity will debit "Discount on note payable". 4. An interest-bearing note does not have "Discount on note payable". 5. An interesting-bearing note requires less cash payments and smaller depreciation expense. 6. An interest-bearing note has a higher amount of total interest expense than a noninterest-bearing note. 1, 3, 5 2, 4, 6 2, 4, 5, 6 1, 3, 6 1, 2, 3, 4
Which is true about using a note with stated interest rate vs. a note without stated interest rate to buy a machine? Assume that both types of notes have the same face amount, due date of principal and interest, and explicit & implicit interest rate.
1. Both an interest-bearing note and a noninterest-bearing note result in the same amount of liability.
2. Using a noninterest-bearing note will result in a smaller recorded amount of PPE.
3. To record interest expense on a noninterest-bearing note, an entity will debit "Discount on note payable".
4. An interest-bearing note does not have "Discount on note payable".
5. An interesting-bearing note requires less cash payments and smaller
6. An interest-bearing note has a higher amount of total interest expense than a noninterest-bearing note.
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