Borrower’s accounting for debt restructurings and modifications

FINANCIAL REPORTING INSIGHTS  | 

Authored by RSM US LLP


When modifying or restructuring outstanding debt arrangements, entities should evaluate all facts and circumstances to ensure the debt modification is appropriately accounted for in accordance with Subtopic 470-50, “Debt – Modifications and Extinguishments,” or Subtopic 470-60, “Debt – Troubled Debt Restructurings by Debtors,” of the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification. To help entities navigate this guidance, the FASB recently released a Staff Educational Paper, Topic 470 (Debt): Borrower’s Accounting for Debt Modifications, which provides an overview of the accounting guidance for, and includes examples of, common debt modifications and exchanges.