[Anonymous]

All – my question may seem broad, but with studying FAR, I have begun to confuse myself a bit.

My question is… is there an easy way to siffernetiate what sort of balance sheet/income accounts and or scenarios are presneted based on present value vs. stated amount? There are so many different scenarios in terms of calculating interest, purchase amounts, etc. I am having trouble remembering
For wuat scenarios the PV factors come into play.

[IwannabeaCPA2017]

you use PV of single sum when you calculate single amount, for instance if you have a lease and the equipment has a residual value then you need to use the PV factor of single sum to translate to present value. Let say if you have minimum payment of 500 per month then you use PV factor of ordinary annuity.. Simply put if you pay multiple payments over and over you use ordinary annuity. If you pay now then it is annuity due in advance. This may be a lot to take in but if you have any questions, copy and paste and we can help break it down. Its much easier when you have actual numbers, at least for me as a visual learner.

good luck!

BEC- PASS (Expiring in DEC 2017)

REG- PASS (Expiring Feb 2018)

AUD- PASS (Expiring Oct 2018)

FAR- 65, 60, 59, 77!!! -GOD BLESS

If I can do it, anyone can do it!

 

[Pawn Maker]

This isn't universal, but as a general rule PV is used long-term. If you have a loan which is made for 9 months then you use the face value of the loan. If you have a loan which is made for 10 years then you use the PV. That's at least how I understand it. If I am wrong, someone please correct me.

AUD: 82
BEC: 80
FAR: 68, 81
REG: 67, 86

[Anonymous]

The point of a present value is so cash flows can be compared on an apples to apples basis.

How could you compare a cash flow a year from now to one 10 years from now without it?

The rule I learned is that anything a year or less, just use the face amount, as the difference between the discounted amount and the face is usually insignificant and immaterial.

Multiple years or periods use a present value. A dollar received today is not the same as a dollar in the future.

[Anonymous]

current assets/liabilities at face value
long term receivables/liabilities at present value

[Author]

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