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Excerpt from ASC 470-60-55-7
Excerpt from ASC 470-60-55-9
Terms |
||
Outstanding balance |
$1,000,000 |
|
Remaining term |
5 years |
|
Maturity date |
December 31, 20X8 |
|
Effective interest rate |
5.95% |
|
Unamortized discount |
$18,856 |
|
Net carrying value |
$981,144 |
|
Coupon |
5.50% |
|
Interest payments |
Annually in December |
|
Principal payment |
Balloon payment at maturity |
Modifications made |
||
Principal forgiveness |
$100,000 |
|
New coupon |
3.00% |
|
Fair value of equity securities granted by FG Corp |
$50,000 |
12/31/X4 |
12/31/X5 |
12/31/X6 |
12/31/X7 |
12/31/X8 |
Total |
|
Interest payments |
$27,000 |
$27,000 |
$27,000 |
$27,000 |
$27,000 |
$135,000 |
Principal payment |
- |
- |
- |
- |
900,000 |
900,000 |
Total undiscounted cash flows on debt |
$27,000 |
$27,000 |
$27,000 |
$27,000 |
$927,000 |
$1,035,000 |
If future undiscounted cash flows (including contingent payments) are: |
Effect on gain recognition and interest expense |
New fees paid to lender |
New fees paid to third parties |
Less than the net carrying value of the original debt
|
|
Reduce the recorded gain
|
Reduce the recorded gain
|
Greater than the net carrying value of the original debt
|
|
Capitalize and amortize
|
Expense
|
Terms |
||
Outstanding balance |
$1,000,000 |
|
Remaining term |
5 years |
|
Maturity date |
December 31, 20X8 |
|
Effective interest rate |
5.95% |
|
Unamortized discount |
$18,856 |
|
Net carrying value |
$981,144 |
|
Coupon |
5.50% |
|
Interest payments |
Annually in December |
|
Principal payment |
Balloon payment at maturity |
Modifications made |
||
Principal forgiveness |
$100,000 |
|
New coupon |
3.00% |
|
Fair value of equity securities granted by FG Corp |
$50,000 |
Term loan carrying value |
$981,144 |
|||
Less: fair value of the equity securities granted by FG Corp |
($50,000) |
|||
New net carrying value |
$931,144 |
|||
Less: future undiscounted cash flows |
($1,035,000) |
|||
Difference |
($103,856) |
Date |
Cash payment |
Interest |
Reduction of carrying value |
Net carrying value |
$931,144 |
||||
12/31/X4 |
$27,000 |
$21,047 |
$5,953 |
925,191 |
12/31/X5 |
27,000 |
20,912 |
6,088 |
919,103 |
12/31/X6 |
27,000 |
20,774 |
6,226 |
912,877 |
12/31/X7 |
27,000 |
20,634 |
6,366 |
906,511 |
12/31/X8 |
927,000 |
20,489 |
906,511 |
— |
Total |
$1,035,000 |
$103,856 |
$931,144 |
Alternative |
Description |
Current period method
|
|
Cumulative period method
|
|
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