When the sum of the future cash flows of a restructured note is above the current...
When the sum of the future cash flows of a restructured note is above the current note’s carrying value, the debtor recognizes:
Multiple Choice
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a gain on the debt restructure.
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a loss on the debt restructure.
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neither a gain nor a loss on the debt restructure.
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both a restructure gain and an early extinguishment loss.
Homework Answers
Your required answer is option C i..e. Neither a gain nor a loss on the debt restructure.
Explanation:
Even Debtor is looking that in future they will ean revenue on this Restructured Note but still they cannot recognize gain on the same because GAAP requires that the debtors compute the interest on Restructured note with new interest rate and recognize the gain over the period.
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