Due to COVID-19, many companies today are experiencing financial difficulties and will not be able to meet their loan covenants or cash flow requirements under their current loan arrangements. As a result, many debtors will restructure their loans with their creditors by extending payment terms, lowering the interest rate, or agreeing to a reduction in the principal amount owed.
This self-study webinar will explain in detail the accounting for debt restructurings, as well as provide thorough examples of realistic potential situations that may arise as a result of these unpredictable and tumultuous times.
To analyze how complicated and unpredictable financial situations (such as the COVID-19 crisis) can require changes in how to handle the accounting of debt restructuring from the perspective of both debtors and lenders.
- ASC Subtopic 470-60 Debt-Troubled Debt Restructuring by Debtors
- ASC Subtopic 470-50 Debt-Modifications and Extinguishments
- Brief comparison to IFRS 7
- Debt issue costs
- Financial difficulty indicators
- Settling troubled debt
- Interest on contingent payments
- Borrowing capacity
• Recognize the appropriate accounting model for a restructured loan from the perspective of the debtor
• Recognize the debtor’s accounting treatment when a loan is restructured with the original creditor
• Recognize the circumstances under which a modification of a debt is considered to be a troubled debt restructuring (TDR)
• Recognize the relationship between troubled debt restructurings and the CECL model
• Identify the tests used to distinguish a loan modification from a loan extinguishment
• Identify the accounting for a loan modification
