7252569-MIdterm-1 (dragged) 29

7252569-MIdterm-1 (dragged) 29 - provides a scenario for...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Eighth Canadian Edition 14-13 D. Extinguishment of Debt/Derecognition 1. Reacquisition of debt before maturity a. The difference between the net carrying amount and the reacquisition price (the amount paid including any call premium and reacquisition expense) is the gain or loss. b. The net carrying amount is the amount payable at maturity, adjusted for any unamortized premium or discount. c. The gain or loss is reflected in income in the period of redemption. This may be considered extraordinary if the criteria of unusual, infrequent, and not depending on management determinations are met. Usually, however, it is shown before extraordinary items. TEACHING TIP Illustration 14-3
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: provides a scenario for the reacquisition of debt prior to maturity. Debt is extinguished two years after issuance and a loss is recognized. E Off-balance Sheet Financing 1. Examples: a. Non-consolidated subsidiaries b. Special purpose entities or variable interest entities c. Operating versus capital leases 2. Rationale for off-balance sheet financing: a. Attempt to "enhance the quality" of the balance sheet. b. Conform to loan covenants. c. "Balance" understatement of assets. F. Reporting Long-Term Debt 1. Disclosures generally indicate the nature of the liabilities, maturity dates, interest rates, call provisions, conversion privileges, restrictions imposed by borrowers, and assets pledged as security....
View Full Document

Ask a homework question - tutors are online