New edition: Accounting for debt modifications and restructurings
FINANCIAL REPORTING INSIGHTS |
Authored by RSM US LLP
We have published a new edition of A guide to accounting for debt modifications and restructurings (formerly titled Fundamentals of accounting for debt modifications and restructurings), our comprehensive publication that explains and illustrates the accounting guidance applicable to debt modifications, restructurings and exchanges. Our guide primarily focuses on the following two subtopics in the Financial Accounting Standards Board’s Accounting Standards Codification (ASC):
- ASC 470-50, “Debt – Modifications and Extinguishments”
- ASC 470-60, “Debt – Troubled Debt Restructurings by Debtors”
The new edition includes updates that address various practice issues, including the following:
- Determining whether the same lender is involved before and after changes are made to the debt
- Assessing multiple changes to the same debt within a one-year period
- Changing from a term loan to a line-of-credit or revolving debt arrangement or vice versa
Additional examples also are included in the new edition, including examples that illustrate:
- Accounting for changes to debt that meet the liability derecognition threshold
- Determining whether changes to debt that include the transfer of assets and the modification of terms meet the definition of a troubled debt restructuring (TDR) and applying the TDR accounting model to those changes
- Accounting for a TDR with a variable interest rate
- Determining the accounting model that should be applied to changes to prepayable debt with a partial repayment of principal and applying the appropriate accounting model to those changes
- Determining the accounting model that should be applied when there are multiple changes to prepayable debt within a one-year period
A complete list of all the topics covered and examples provided in our debt modifications and restructurings guide is included in its table of contents.
Call us at (325) 677-6251 or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by RSM US LLP and originally appeared on 2020-11-30.
2020 RSM US LLP. All rights reserved.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Condley and Company, LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Condley and Company can assist you, please call (325) 677-6251.