F5M6

Question 1

Why do creditors allow debtors to attempt to restructure debt

Answer 1

to improve chances of collection

Question 2

What must happen when debtors transfer asset

Answer 2

1. adjust ass to FV

2. recognize gian

Question 3

When a debtor is transferring assets due to debt restructuring, what is recognized

Answer 3

always a gain

Question 4

Treatment of modification of terms in debt agreement

Answer 4

debtor accounts for restructuring PROSPECTIVELY

Question 5

Under modification terms, the debt (has/has not) been extinguished

Answer 5

has NOT

CANNOT recognize gain

Question 6

How does the creditor recognize debt restructure

Answer 6

accounts for debt at fair value

impairment is discounted on historical rates

Question 7

Creditor’s portion of debt restructuring

Answer 7

receivable - FV = loss/bad debt

Question 8

How is common stock reported

Answer 8

Common stock at par value

any excess due to market value being over or under par value goes to APIC