Research the related GAAP and prepare a short memo to Betty that summarizes how to report the $500,000 note payable and $200,000 account receivable for Nesheim.
Nesheim Construction Company borrowed $500,000 from Oregon Bank. During the same year, Oregon Bank hired Nesheim to remodel its main branch facility for $200,000. Instead of paying cash for the remodeling, Oregon Bank agreed to an account receivable that is due in 6 months. At the end of the fiscal year, both the note payable and account receivable are outstanding. Nesheim's controller, Betty Johnson, is determining how to report these items on Nesheim's balance sheet. Betty believes the two can be offset resulting in a net note payable of $300,000 on the balance sheet. However, she isn't quite sure. As assistant controller, Betty has asked you to research the FASB Codification database to provide clarity how this should be reported.