Resturcturing Debt Data

976 WordsAug 4, 20114 Pages
Restructuring Debt Data ACC 545 July 18, 2011 Restructuring Debt Data Understanding the reporting and disclosure requirements for the different types of debt regarding debt restructuring is imperative. The manager of this company has requested an explanation of the above regarding bonds payable, notes payable, and capital leases. This paper should satisfy any questions about these topics. Long-Term Liabilities Included are several types of long-term liabilities; bonds payable, notes payable, and capital leases. Each of these types of debts have some similarities and some differences regarding the reporting and disclosure requirements, so to better understand those requirements and ensure proper application of requirements, an…show more content…
The capital lease reported on the balance sheet at the end of the reporting period is the net of principal payment component of the lease payment. Reporting and Disclosures Note disclosures for long-term debt should include the nature of the liabilities, maturity dates, interest dates, call provisions, conversion privileges, restrictions imposed by creditors, and assets designated or pledged as security (Kieso, et al., 2007). In addition, any sinking fund future payments and maturity amounts of long-term debt during each of the next five years is required for disclosure. If the company is able to estimate the fair value of the long-term debt practically, disclosure of this information is required too. Debt Restructuring With debt restructuring, if there is a substantive modification of any of the terms of the existing debt or a purchase or other settlement of an existing debt through repayment or replacement, then the debtor needs to account for a gain or loss on the debt restructuring. In this company’s situation, the debt settled earlier than the original maturity date; so therefore, there was a substantive modification of terms. In this case, the journal entries are as follows: Notes Payable……………………………………..3,000,000 Gain on the Restructuring of Debt……………………………600,000 Land…………………………………………………………..1,950,000 Gain on Disposition of Land………………………………….450,000 To Record Settlement of

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