The debt restructuring is the process by which a company may delay its bankruptcy. It is done by extending the dates of liability payments or by procuring the loan at lower interest rates. To define: The way by which gain will be determined as per modified terms under bankruptcy law and if there is no bankruptcy law.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 21, Problem 1UTI

To determine

Concept Introduction:

The debt restructuring is the process by which a company may delay its bankruptcy. It is done by extending the dates of liability payments or by procuring the loan at lower interest rates.

To define:The way by which gain will be determined as per modified terms under bankruptcy law and if there is no bankruptcy law.

Expert Solution & Answer

Explanation of Solution

Debt restructuring can be done in various ways. One of the ways of debt restructuring is the modification of terms. In this method, gain on restructuring is recognized when the future payment of cash flows is less than the previous debt. For instance, the interest paid is lower than the previous interest paid.

In a bankruptcy organization, the principles set under FASB ASC 470 is not applied. In this case, gain or loss is measured by using a different approach. The gain can be measured by differentiating the present value of the fair value of restructured gain and the previous carrying basis of debt.

Under this law, there will be no gain, if the carrying basis of debt being restructured and the total of interest amount and principal amount after debt restructured (considering the discounted present value as per market rates) is similar.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

When the original terms of a debt agreement are changed because of financial difficulties experienced by the debtor (borrower), the new arrangement is referred to as a troubled debt restructuring. Such a restructuring can take a variety of forms. For accounting purposes, these possibilities are categorized. What are the accounting classifications of troubled debt restructurings?

What are the general rules for measuring and recognizinggain or loss by both the debtor and the creditor in atroubled-debt restructuring involving a modification ofterms?

(Based on Appendix 14B) When the original terms of a debt agreement are changed because of financialdifficulties experienced by the debtor (borrower), the new arrangement is referred to as a troubled debtrestructuring. Such a restructuring can take a variety of forms. For accounting purposes, these possibilities arecategorized. What are the accounting classifications of troubled debt restructurings?

Answer 2

Question

Chapter 21, Problem 1UTI

To determine

Concept Introduction:

The debt restructuring is the process by which a company may delay its bankruptcy. It is done by extending the dates of liability payments or by procuring the loan at lower interest rates.

To define:The way by which gain will be determined as per modified terms under bankruptcy law and if there is no bankruptcy law.

Expert Solution & Answer

Explanation of Solution

Debt restructuring can be done in various ways. One of the ways of debt restructuring is the modification of terms. In this method, gain on restructuring is recognized when the future payment of cash flows is less than the previous debt. For instance, the interest paid is lower than the previous interest paid.

In a bankruptcy organization, the principles set under FASB ASC 470 is not applied. In this case, gain or loss is measured by using a different approach. The gain can be measured by differentiating the present value of the fair value of restructured gain and the previous carrying basis of debt.

Under this law, there will be no gain, if the carrying basis of debt being restructured and the total of interest amount and principal amount after debt restructured (considering the discounted present value as per market rates) is similar.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 21, Problem 1UTI

To determine

Concept Introduction:

The debt restructuring is the process by which a company may delay its bankruptcy. It is done by extending the dates of liability payments or by procuring the loan at lower interest rates.

To define:The way by which gain will be determined as per modified terms under bankruptcy law and if there is no bankruptcy law.

Expert Solution & Answer

Explanation of Solution

Debt restructuring can be done in various ways. One of the ways of debt restructuring is the modification of terms. In this method, gain on restructuring is recognized when the future payment of cash flows is less than the previous debt. For instance, the interest paid is lower than the previous interest paid.

In a bankruptcy organization, the principles set under FASB ASC 470 is not applied. In this case, gain or loss is measured by using a different approach. The gain can be measured by differentiating the present value of the fair value of restructured gain and the previous carrying basis of debt.

Under this law, there will be no gain, if the carrying basis of debt being restructured and the total of interest amount and principal amount after debt restructured (considering the discounted present value as per market rates) is similar.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 21, Problem 1UTI

To determine

Concept Introduction:

The debt restructuring is the process by which a company may delay its bankruptcy. It is done by extending the dates of liability payments or by procuring the loan at lower interest rates.

To define:The way by which gain will be determined as per modified terms under bankruptcy law and if there is no bankruptcy law.

Expert Solution & Answer

Explanation of Solution

Debt restructuring can be done in various ways. One of the ways of debt restructuring is the modification of terms. In this method, gain on restructuring is recognized when the future payment of cash flows is less than the previous debt. For instance, the interest paid is lower than the previous interest paid.

In a bankruptcy organization, the principles set under FASB ASC 470 is not applied. In this case, gain or loss is measured by using a different approach. The gain can be measured by differentiating the present value of the fair value of restructured gain and the previous carrying basis of debt.

Under this law, there will be no gain, if the carrying basis of debt being restructured and the total of interest amount and principal amount after debt restructured (considering the discounted present value as per market rates) is similar.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 21, Problem 1UTI

To determine

Concept Introduction:

The debt restructuring is the process by which a company may delay its bankruptcy. It is done by extending the dates of liability payments or by procuring the loan at lower interest rates.

To define:The way by which gain will be determined as per modified terms under bankruptcy law and if there is no bankruptcy law.

Expert Solution & Answer

Explanation of Solution

Debt restructuring can be done in various ways. One of the ways of debt restructuring is the modification of terms. In this method, gain on restructuring is recognized when the future payment of cash flows is less than the previous debt. For instance, the interest paid is lower than the previous interest paid.

In a bankruptcy organization, the principles set under FASB ASC 470 is not applied. In this case, gain or loss is measured by using a different approach. The gain can be measured by differentiating the present value of the fair value of restructured gain and the previous carrying basis of debt.

Under this law, there will be no gain, if the carrying basis of debt being restructured and the total of interest amount and principal amount after debt restructured (considering the discounted present value as per market rates) is similar.

Answer 6

Chapter 21, Problem 1UTI

To determine

Concept Introduction:

The debt restructuring is the process by which a company may delay its bankruptcy. It is done by extending the dates of liability payments or by procuring the loan at lower interest rates.

To define:The way by which gain will be determined as per modified terms under bankruptcy law and if there is no bankruptcy law.

Expert Solution & Answer

Explanation of Solution

Debt restructuring can be done in various ways. One of the ways of debt restructuring is the modification of terms. In this method, gain on restructuring is recognized when the future payment of cash flows is less than the previous debt. For instance, the interest paid is lower than the previous interest paid.

In a bankruptcy organization, the principles set under FASB ASC 470 is not applied. In this case, gain or loss is measured by using a different approach. The gain can be measured by differentiating the present value of the fair value of restructured gain and the previous carrying basis of debt.

Under this law, there will be no gain, if the carrying basis of debt being restructured and the total of interest amount and principal amount after debt restructured (considering the discounted present value as per market rates) is similar.

Answer 7

Chapter 21, Problem 1UTI

To determine

Concept Introduction:

The debt restructuring is the process by which a company may delay its bankruptcy. It is done by extending the dates of liability payments or by procuring the loan at lower interest rates.

To define:The way by which gain will be determined as per modified terms under bankruptcy law and if there is no bankruptcy law.

Answer 8

Expert Solution & Answer

Explanation of Solution

Debt restructuring can be done in various ways. One of the ways of debt restructuring is the modification of terms. In this method, gain on restructuring is recognized when the future payment of cash flows is less than the previous debt. For instance, the interest paid is lower than the previous interest paid.

In a bankruptcy organization, the principles set under FASB ASC 470 is not applied. In this case, gain or loss is measured by using a different approach. The gain can be measured by differentiating the present value of the fair value of restructured gain and the previous carrying basis of debt.

Under this law, there will be no gain, if the carrying basis of debt being restructured and the total of interest amount and principal amount after debt restructured (considering the discounted present value as per market rates) is similar.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 21 - Prob. 1UTI Ch. 21 - Prob. 2UTI Ch. 21 - Prob. 4UTI

Explanation of Solution

Want to see more full solutions like this?

Chapter 21 Solutions