Debt Covenant Compliance

Question 1

For a troubled debt restructuring involving only a modification of terms, which of the following items specified by the new terms would be compared to the carrying amount of the debt to determine if the debtor should report a gain on restructuring?

Answer 1

The total future cash payments.

Accounting for debtors when the restructuring is a modification of terms is determined by whether the sum of the cash payments under the new terms (not discounted to present value) equal or exceed the amount of the obligation.