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A reporting entity may modify the terms of its outstanding debt by restructuring its terms or by exchanging one debt instrument for another. A debt modification may be accounted for as (1) the extinguishment of the existing debt and the issuance of new debt, or (2) a modification of the existing debt, depending on the extent of the changes.
Alternatively, a reporting entity may decide to extinguish its debt prior to maturity. This may be due to a number of reasons, including changes in interest rates, credit rating, or its capital needs.
This chapter discusses the accounting for debt modifications and exchanges, including:
  • Troubled debt restructurings (TDR)
  • Modifications or exchanges of term loans or debt securities
  • Modifications or exchanges of lines of credit or revolving-debt arrangements
  • Modifications or exchanges of loan syndications or participations
This chapter also discusses the accounting for debt defeasances and extinguishments.

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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