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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....
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- Spring '10