[Anonymous]

Hi,

Please confirm the following:

For debtor: you DO NOT recognize either gain or loss on debt restructuring if entire payment of debt isn’t effected.

For creditor: you DO NOT recognize any gain whatsoever, you only recognize loss. So, if you get undercounted future cash flows in excess of original debt, you recognize that as interest NOT gain.

So, basically, gain is recognized for the debtor only not the creditor.

Right?

Thanks,

[jaxon1024]

Correct. The only way the creditor could recognize a gain is if the debtor paid more than the original debt, which would never happen. And a loss on restructuring for the creditor is never extraordinary, but the gain for the debtor can be.

Reg 85 (11-21-14)
Aud 93 (1-17-15)
Bec 89 (2-27-15)
Far 92 (5-7-15)

Becker Self Study and Wiley Test Bank

[Author]

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