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This posting addresses debt instrument transactions.

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1. A debt instrument with no ready market is exchanged for property whose fair market value is currently indeterminable. When such a transaction takes place:

a) The present value of the debt instrument must be approximated using an imputed interest rate.

b) It should not be recorded on the books of either party until the fair market value of the property becomes evident.

c) The board of diretors of the entity receiving the property should estimate a value for the property that will serve as a basis for the transaction.

d) The directors of both entities involved in the transaction should negotiate a value to be assigned to the property.

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The solution provides the correct answer for the multiple choice question that states, A debt instrument with no ready market is exchanged for property whose fair market value is currently indeterminable. When such a transaction takes place ...

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Because the debt instrument has no ready market and is exchanged for property with a FMV that is indeterminable, ...

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