Fall 2013_Acc 3100_Ch 14

Companies may only elect the fair value option when 1

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Unformatted text preview: t require that those circumstances exist. Companies may only elect the fair value option when 1. 2. When a group of financial assets or liabilities is managed and its performance is evaluated on a fair value basis, or If the fair value option reduces “accounting mismatch.” Appendix 14B Troubled Debt Restructuring When changing the original terms of a debt agreement is motivated by financial difficulties experienced by the debtor (borrower), the new arrangement is referred to as a troubled debt restructuring. A troubled debt restructuring may be achieved in either of two ways: 1.The debt may be settled at the time of the restructuring. 2.The debt may be continued, but with modified terms. 14-35 14-36 Debt Settled at Time of Restructuring First Prudent Bank is holding a $30,000,000 note from the developer of some property. The developer is in financial trouble and cannot pay the bank the amount owed. The bank agrees to accept property with a fair value of $20,000,000 in full settlement of the note. The property is carried...
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This note was uploaded on 11/19/2013 for the course ACCOUNTING 3100 taught by Professor He during the Fall '10 term at CUNY Baruch.

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