008 Debt Retirement Flashcards
1
Q
How are gains/losses from extinguishment of debt reported on the income statement?
A
Recognized as components of income from continuing operations.
2
Q
List the conditions that must exist for debt to be extinguished.
A
1 Debtor pays creditor and is relieved of obligation; 2 Debtor is legally released from being primary obligor.
3
Q
When is retirement of debt considered extraordinary?
A
When the “unusual and infrequent” criteria are met.
4
Q
List the steps to retire debt on the books.
A
1 Record interest, amortization of discount/premium, issue costs to date of retirement; 2 Remove debt and related accounts; 3 Record gain or loss.
