A restructuring of debt constitutes a troubled debt restructuring if the creditor, for legal or economic reasons
Question:
A restructuring of debt constitutes a troubled debt restructuring if the creditor, for legal or economic reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would otherwise not consider.
True or False
2) Which of the following statements is true regarding a troubled debt restructuring?
In a troubled debt restructuring, there is a lack of symmetry in the financial reporting of the borrower and lender.
A troubled debt restructuring can only be accomplished through a continuation with modification of debt terms including cancelation of the original loan and execution of a new loan agreement.
In a troubled debt restructuring, GAAP restructuring gains and losses for accounting are equal to real economic gains and losses for the companies involved.
All accounting aspects of a troubled debt restructuring are explicitly covered by IFRS.
Advanced Accounting
ISBN: 978-1305084858
12th edition
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng