In a debt restructuring, the gain is measured as a) The difference between carrying amount and fair value b) The total amount of debt forgiven c) The present value of new payments d) The face value of new debt
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- A gain or loss from debt restructuring should be A. treated as increase or decrease in Paid-in Capital B. recognized in income of the period of restructuring C. amortized over the remaining original life of the restructured loan D. allocated between the portion that is an increase (decrease) in Paid-in Capital and a portion that is recognized in the current incomeHow to calculate the appropriate interest expense based on the amount of outstanding debt using iterative calculations? Give an example.Debt issuance costs are: Accounted for as a deduction from the equity balance on the balance sheet Recognized initially as a current liability on the balance sheet Amortized over the term of the related debt liability Expensed on the income statement when the transaction occurs Which one is the correct answer please?
- How does the difference between the book value of the debt and the reacquisition price represents either a gain or a loss on the early extinguishment of debt?Describe the key characteristics of a debt investment and demonstrate how to account for a purchase and for interest revenue.What is the effective interest rate of a bond or other debt instrument measured at amortized cost? Select the correct response: The interest rate currently charged by the entity or by others for similar debt instruments (i.e., similar remaining maturity, cash flow pattern, currency, credit risk, collateral, and interest basis). The interest rate that exactly discounts estimated future cash payments or receipts through the expected life of the debt instrument or, when appropriate, a shorter period to the net carrying amount of the instrument. The basic, risk-free interest rate that is derived from observable government bond prices The stated coupon rate of the debt instrument.
- Which of the following would be included in the financing section? A. loss on sale of investments B. depreciation expense C. increase in notes receivable D. decrease in notes payablewhat of the following is the correct calculation for interest cover : a- total debt / interest payable b- interest payable / total debt c- operating profit / interest payable d- interest payable / operating profitInterest revenue for debt investments at fair value through other comprehensive income is computed based on the instruments’ a. face value using the effective interest rate. b. face value using the nominal interest rate. c. carrying amount using the effective interest rate. d. carrying amount using the nominal interest rate.