Notes Payable | CPA FAR Exam | Financial Reporting

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So what’s the difference between the stated rate and the imputed rate? Well, what happens if your dad loans you some money to buy a new car and tells you that you have to only pay back the principal, but no interest is necessary… what a good dad, right?

Sure, but in the financial reporting world, companies will need to determine the imputed market rate for valuing the note payable on the balance sheet. The imputed rate is essentially an estimate as to what the rate would be on a similar loan had it been made at an arms-length on the open market.

If you’re reading this and thinking “wuuuuut??”, well that’s what this YouTube video is for!

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