2H Long-Term debt Flashcards
Present value of $1
FV / (1+Interest rate) to the power of # of periods
Future value of $1
PV x (1+Interest rate) to the power of # of periods
convert FV to PV
FV / (1+Interest rate) to the power of # of periods
convert PV to FV
PV x (1+Interest rate) to the power of # of periods
Spreadsheet formula
PV(rate,nper,pmt,[fv],[type])
Debt modification
Changes to existing debt (except interest rate reset or substitution of collateral)
Extinguishment of debt
Relieved of any and all debt obligations
Troubled debt restructuring
Uncollectibility of debt is probable and CV > future cash flows discounted to PV.
Troubled debt impairment
Affects only the creditors books
ASC 310
Dr - Bad debt
Cr - Allowance
Troubled debt restructure qualification
- Credit grants concessions to the debtor which otherwise would not be considered.
- Affects both debtor and creditor books
Creditor settlement of debt at less than carrying value
transfers assets or stock for the difference
Dr - Asset
Dr - Loss
Cr - Interest Receivable
Cr - Note Receivable
(Creditor) Debt continuation with modified terms to relieve troubled debt
Dr - Bad Debt
Cr - Note Receivable
Cr - Interest Receivable
Cr - Allowance
Debtor settlement of debt at less than carrying value
transfers assets or stock for the difference
Dr - Note Payable Dr - Interest Payable Dr - Accum Depr Cr - Gain on transfer Cr - Gain on settlement Cr - Asset
(Debtor) Debt continuation with modified terms to relieve troubled debt
Dr - Note Payable
Dr - Interest Payable
Cr - Gain on restructure
Cr - Interest Payable
Coupon rate = market rate
bond is sold at face value
