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With respect to the debtor, ASC 310-40-15-20 provides indicators to be considered when evaluating whether a borrower is experiencing financial difficulty. These indicators include the following:
1.
The debtor is currently in default on any of its debt or it is probable that the debtor will be in default in the foreseeable future without the modification.
2.
The debtor has declared or is in the process of declaring bankruptcy.
3.
There is significant doubt as to whether the debtor will continue to be a going concern.
4.
The debtor has securities that have been delisted, are in the process of being delisted, or are under threat of being delisted from an exchange.
5.
Based on estimates and projections that encompass only the current business capabilities, the creditor forecasts that the debtor’s entity-specific cash flows will be insufficient to service the debt (interest and principal) in accordance with the contractual terms of the existing agreement for the foreseeable future.
6.
Absent the current modification, the debtor cannot obtain funds from sources other than the existing creditors at an effective interest rate equal to the current market interest rate for similar debt for a non- troubled debtor.
The guidance specifically states that these factors above are not intended to be all-inclusive. Other factors may exist that indicate that a borrower is experiencing financial difficulty.

PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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