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Unformatted text preview: See example transaction on transfer of assets on page 717 and note that the lender records a loss by making a Debit to Allowance for Doubtful Accounts. The borrower records a loss on the assets transferred to the lender and a gain on restructuring of the debt. B. Continuation of debt with revised terms Can include: Reduction of stated interest Extension of maturity date for face amount Reduction of the face amount due Reduction or deferral of interest When the total future cash flows for the revised debt are greater than or equal to the pre-restructuring carrying amount, the borrower records no gain. The lender does recognize the loss and modifies its journal entries (see example on pages 720-721. When the pre-restructuring carrying amount exceeds the total future cash flows, the borrower records a gain (see example starting on the page 721 and continuing through page 722). 2...
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- Spring '08