Raven receives a 3-year note receivable from a customer for goods sold. raven should report this note receivable in its financial statements as a non current asset.
A note receivable is a written agreement to pay a certain sum of money to another party on one or more dates in the future. The holder of the note views this as an asset. In order to give the debtor additional time to pay, past-due accounts receivable are occasionally changed into notes receivable.
These notes occasionally also include a personal guarantee from the company's owner. If a note receivable is due within a year, it should be recorded on the balance sheet as a current asset. If it is due more than a year from now, it should be recorded as a non-current (long-term) asset.
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