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Anitha
Level 1
February 3, 2021

Applicable AFR rate for service warranty income method

  • February 3, 2021
  • 1 reply
  • 1 view

During income calculation using service warranty income method, what should we take as AFR rate when the federal rate is 0.15% (which is what the short term AFR is for Dec 2020).

The guidelines say we should round it to nearest full percent. Should this be zero or 1% ? 

Much appreciate any help

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    1 reply

    qbteachmt
    qbteachmt
    Level 15
    February 3, 2021

    Typical Fed rounding is: first 5 go down, second 5 go up.

    1.0, 1.1, 1.2, 1.3, and 1.4 = 1.0

    1.5, 1.6, 1.7, 1.8, and 1.9 = 2.0

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