Question

Plant assets purchased on long-term credit contracts should be accounted for at

a. the total value of the future payments.
b. the future amount of the future payments.
c. the present value of the future payments.
d. none of these answer choices are correct.

Answer 1

Plant assets purchased on long-term credit contracts should be accounted for using the present value of the future payments.

Step-by-step explanation:

When plant assets are purchased on long-term credit contracts, they should be accounted for using the present value of the future payments. This means that the future payments are adjusted to their current value by considering the time value of money. The present value is calculated by discounting the future payments using an appropriate interest rate.