Problem:
Suppose you have been hired by company XYZ to serve as a consultant who must explain the accounting treatment for notes receivables. Outline a memo that explains the advantages and disadvantages of preparing notes receivables using the fair value method versus using the historical cost method. Also, recommend to management the method that would provide the greatest benefit to the company.
Required:
Question: Support your response with specific examples of the benefits that would be derived from the method that you recommend.
Note: Be sure to show how you arrived at your answer.