2019 - 2023 PwC. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Both IFRS Standards and US GAAP address debt modifications. All rights reserved. Todays deals require you to look at the bigger picture. This latest edition includes guidance on ASU 2022-02 (troubled debt restructurings and vintage disclosures), with new interpretations and examples based on experience with companies implementing ASC 326. This Subtopic provides accounting and reporting guidance for debt (and certain preferred stock) with specific conversion features and other options as follows: Debt instruments with detachable warrants Convertible securitiesgeneral Beneficial conversion features Interest forfeiture Induced conversions Modification or exchange of financial liabilities Do you have modifications or exchanges of fixed rate financial liabilities that do not result in derecognition? of Professional Practice, KPMG US. When they are substantially modified (i.e. A gain or loss should be recognised in profit or loss for modifications of such financial liabilities that do not result in derecognition. Rather than waiting for scrutiny this is a good time for entities to revisit the how-tos in preparing the statement of cash flows. Accordingly, we believe that modifications whose effect is included in the quantitative assessment, and that are not considered substantial based on that assessment, cannot generally be considered substantial on their own from a qualitative perspective. Informing your decision-making. KPMG does not provide legal advice. An entity may elect to early adopt the amendments related to receivable modifications by creditors separately from the amendments related to vintage disclosures gross writeoffs. Therefore, diverse presentation practices remain. This live webcast will be converted to a CPE-eligible self-study and is available for a nominal fee through KPMG Executive Education. KPMG does not provide legal advice. Use our Accounting Research Online for financial reporting resources. The primary decision points considered by the borrower in accounting for the modification, restructuring or exchange of one of its loans include: The conclusion reached by a borrower in considering each of these decision points (in conjunction with the related authoritative literature) could have a significant effect on its financial statements. september 15, 2017 Debt arrangements are often modified, not only when a borrower is in financial difficulty but also to adjust to more favorable market financing conditions; and COVID-19 has caused economic volatility that has resulted in an even greater volume of modifications. This requires our clients to constantly appraise the nature of their present banking relationships, evaluate alternative pools of capital, understand their true cost of capital and approach financing in the context of an effective overall capital management strategy. Receive timely updates on accounting and financial reporting topics from KPMG. This Handbook provides an in-depth look at statement of cash flows classification issues and noncash disclosure requirements. Do the changes increase the borrowing capacity of a line-of-credit or revolving debt arrangement. For a variety of reasons, borrowers and lenders may renegotiate the terms of existing loans or exchange an existing loan for a new loan with the same lender. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Generally, include in the gain or loss on extinguishment. In addition, current triggers for market change (e.g. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Applicability All entities Relevant dates Effective immediately Report contents This may be due to a number of reasons, including changes in interest rates, credit rating, or its capital needs. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. 33 rd Annual Accounting & Financial Reporting Symposium. Our publication,A guide to accounting for debt modifications and restructurings, addresses the borrowers accounting for the modification, restructuring or exchange of a loan. Womble Bond Dickinson (UK) LLP's property litigation team 'provides clear and practical advice' to its roster of clients, which includes housing associations, local authorities, property developers and investors, landed estates and retailers.Senior counsel and national team leader Jen Smurthwaite splits her time between the firm's Leeds and Newcastle offices, and advises on contentious . For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Informing your decision-making. The modification adds or eliminates a substantive conversion option at the date of the modification. As the FASB and SEC focus on providing evermore useful information to financial statement users, they have specifically mentioned the statement of cash flows as a way to provide that information. Unlike IFRS 9, US GAAP does not require or permit a qualitative assessment if the 10% quantitative test is not met. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Yet, there has not been significant standard setting in this area since 2016 when the EITF clarified a series of classification issues and changed the presentation of restricted cash and cash equivalents. Recognition of expected credit losses, writeoffs and recoveries, Methods to estimate expected credit losses and collective assessment, Historical loss experience, forecasts and reversion, Credit enhancements and practical expedients, Purchased financial assets with credit deterioration, Business combinations and asset acquisitions, Other investments in equity method investees, Specific considerations for insurance entities, commercial entities and trade receivables, Targeted changes foravailable-for-sale debt securities, Presentation, disclosure, effective date and transition. Depending on its facts and circumstances, the borrower may be required to: (a) adjust the carrying amount of the loan, (b) change the amount of interest expense recognized in the income statement on a going-forward basis or recognize a gain or loss in the income statement and (or) (c) expense some of the costs incurred to execute the changes and (or) defer and amortize other costs. We explain cash flow classification issues and noncash disclosure requirements in detail. In June 2016, the FASB issued ASU 2016-13. KPMG does not provide legal advice. Interpretation of changing standards . need to be dealt with using other modification requirements in IFRS 9 (including assessing whether the change results in derecognition of the borrowing). The accounting implications differ depending on whether the borrowers or lenders accounting is being considered. revise the effective interest rate of the debt). Latest edition: We explain the equity method of accounting in detail, providing examples and analysis. 2. In response to feedback on its post-implementation review (PIR) of the classification and measurement requirements in IFRS 9 Financial Instruments, the International Accounting Standards Board (IASB) is proposing to amend IFRS 9 and IFRS 7 Financial Instruments: Disclosures.The proposals include guidance on the classification of financial assets, including those with ESG-linked features. The KPMG accounting research website to access additional resources for your financial reporting needs. Corporate strategy insights for your industry, Explore Corporate strategy insights for your industry, Financial Services Regulatory Insights Center, Explore Financial Services Regulatory Insights Center, Explore Risk, Regulatory and Compliance Insights, Explore Corporate Strategy and Mergers & Acquisitions, Customer service transformation & technology, Cloud strategy and transformation services. Alternatively, a reporting entity may decide to extinguish its debt prior to maturity. In-depth analysis, examples and insights to give you an advantage in understanding the requirements and implications of financial reporting issues. We use cookies to personalize content and to provide you with an improved user experience. In-depth guidance on, and interpretation of, ASC 326. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. Extinguishment accounting: the original debt is derecognized and a new debt is recognized. Step 3: Determine the transaction price. Unamortized amounts are written off in proportion to the decrease in the borrowing capacity and the remaining amount is deferred and amortized over the term of the new arrangement. Recently, Ernst & Young sold its management-consulting business to Cap Gemini Group SA, a large and publicly traded computer services company headquartered in France. Step 2: Identify the performance obligations in the contract. Sharing our expertise and perspective. Instead, the effective interest rate of the debt is recalculated so that the present value of the modified contractual cash flows equals its amortized cost. All rights reserved. This self-study is also mobile-compatible. Debt Restructuring Under IFRS 9: Changes You May Have Missed. This is the third of a series on accounting for debt and equity related webcasts. See FG 3.4 for information on modifications and exchanges of term loans and debt securities, and FG 3.6 for information on modifications and exchanges of loan syndications and participations. Delivering insights to financial reporting professionals. Investment accounting is how we refer to the accounting for debt and equity securities that dont fall under other accounting models, such as the equity method or consolidation. Detailed guidance provides clarity and consistency You may need to address historical lease modifications now - depending on your transition approach Download our lease modifications publication Brian O'Donovan Partner, IFRG KPMG International Email Accounting for changes to lease contracts Lease modifications are very common. Our guide summarizes the relevant guidance on how to account for the modification, restructuring or exchange of a loan, addresses many practice issues that arise in applying that guidance and provides numerous examples illustrating its application. Do the changes meet the definition of a troubled debt structuring? RSM US LLP is a limited liability partnership and the U.S. member firm of RSM International, a global network of independent audit, tax and consulting firms. Latest edition: Side-by-side comparison of IFRS Accounting Standards and US GAAP. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Read a newly released guide from @KPMG_US Department of Professional Practice which provides guidance on #accounting for #debt or #equity #financing transactions. Latest edition: Our in-depth consolidation guide, covering variable interest entities, voting interest entities and NCI. You can set the default content filter to expand search across territories. use the outcome of the most likely scenario. of Professional Practice, KPMG US. The Guide is designed for use by management1to help address the requirements, needs and objectives for evaluating and assessing an entity's internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the COSO 2013 Framework published by the Committee of Sponsoring Organizations of the Treadway i. The accounting implications differ depending on whether the borrower's or lender's accounting is being considered. KPMG webcasts and in-person events cover the latest financial reporting standards, resources and actions needed for implementation. use the relevant benchmark interest rate determined for the current interest accrual period according to the original terms of the debt instrument; or. The first comprehensive accounting and reporting guidance on investments in debt and equity securities was issued in 1993. This content outlines initial considerations meriting further consultation with life sciences organizations, healthcare organizations, clinicians, and legal advisors to explore feasibility and risks. Do the changes make a new or changed term loan substantially different from the old term loan? Improving business performance, turning risk and compliance into opportunities, developing strategies and enhancing value are at the core of what we do for leading organizations. Refer to Appendix D of the publication for a summary of the updates. Cash flows are classified as either operating, financing or investing activities depending on their nature. Here we offer our latest thinking and top-of-mind resources. Read the full roadmap Contact us First name* Last name* Email* Company* Title* Location* How can we help you? A debt modification may be accounted for as (1) the extinguishment of the existing debt and the issuance of new debt, or (2) a modification of the existing debt, depending on the extent of the changes. Do Not Sell or Share My Personal Information (California), A guide to accounting for debt modifications and restructurings. But there have been several changes (especially for equity securities) as well as challenges in applying the guidance to new facts and circumstances and new types of investments. Informing your decision-making. Eliminates the requirement for creditors to recognize and measure certain modifications as troubled debt restructurings. For more detail about our structure please visithttps://kpmg.com/governance. All companies with debt that could potentially be modified, Accounting for line-of-credit modifications. This one focuses on accounting for debt modifications. [IFRS 9.3.3.2-3.3.3, 5.1.1, B3.3.6] Differences may arise in practice. US GAAP specifies how to perform the 10% test; IFRS 9 is less prescriptive. Explore challenges and top-of-mind concerns of business leaders today. Are you still working? of Professional Practice, KPMG US. Step 4: Allocate the transaction price to the performance obligations in the contract. A reporting entity should also derecognize a debt instrument (and recognize a new one) when a debt modification or exchange is deemed an extinguishment. A reporting entity may modify the terms of its outstanding debt by restructuring its terms or by exchanging one debt instrument for another. Using Q&As and examples, KPMG provides interpretive guidance on debt and equity financings. Navigating the accounting for debt modifications can be challenging. Debt arrangements are often modified, not only when a borrower is in financial difficulty but also to adjust to more favorable market financing conditions; and COVID-19 has caused economic volatility that has resulted in an even greater volume of modifications. Prior to join. Informing your decision-making. Connect with us via webcast, podcast, or in person at industry events. Each member firm is responsible only for its own acts and omissions, and not those of any other party. All rights reserved. All rights reserved. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. In-depth analysis, examples and insights to give you an advantage in understanding the requirements and implications of financial reporting issues. Modification accounting: the original debt is not derecognized. Informing your decision-making. Receive timely updates on accounting and financial reporting topics from KPMG. Reduction in impairment models Publication date: 31 Dec 2022 us PP&E and other assets guide 1.1 This chapter focuses on property, plant, and equipment (PP&E) costs and provides guidance on cost capitalization, including what types of costs are capitalizable and when capitalization should begin. Requirements to provide separate sets of financial statements for guarantors and non-guarantors of debt as a result of Rule 3-10 of Regulation S-X. This new KPMG guide compares the financial reporting implications of the CARES Act under IFRS to US GAAP. 2023 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. Our in-depth guide to accounting for employee benefits under ASC 420, ASC 710, ASC 712, ASC 715 and ASC 718-40. Receive timely updates on accounting and financial reporting topics from KPMG. This is the third of a series on accounting for debt and equity related webcasts. It may require significant judgment, in particular around the underlying terms, assumptions, calculations and conclusions. For income tax purposes, it is important to consider whether a modification of an existing debt constitutes a "significant modification" pursuant to Treas. Potentially misunderstood and often an afterthought when financial statements are being prepared, it provides key information about an entitys financial health and its capacity to generate cash. Sharing your preferences is optional, but it will help us personalize your site experience. KPMG does not provide legal advice. This content outlines initial considerations meriting further consultation with life sciences organizations, healthcare organizations, clinicians, and legal advisors to explore feasibility and risks. Ind AS Implementation Guide I 26 Key principles Financial instruments that give rise to a contractual obligation to deliver cash or another financial asset are classified as financial liabilities. 6. But identifying the appropriate activity category for the many types of cash flows can be complex and regularly attracts SEC scrutiny. Debt modifications: IFRS Standards vs US GAAP. 61, 71, 82 and 90, as well as the Auditing Standards Board's proposal to expand its fraud standard which would substantially increase the need to . These materials were downloaded from PwC's Viewpoint (viewpoint.pwc.com) under license. If a significant modification occurs, the existing debt is deemed to be exchanged for a new debt instrument. Latest edition: Our comprehensive guide to ASC 280 with analysis, Q&As and examples. However, if a debt instrument has an effective interest rate of zero, a change in the timing of cash flows will have no effect on the quantitative assessment, so should be incorporated into the qualitative assessment to ensure that its impact is considered. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Use our Accounting Research Online for financial reporting resources. The adjustment to the debt carrying amount. Carry out therapeutic regimens such as behavior modification and personal development programs, under the supervision of special education instructors, psychologists, or speech-language pathologists. Our in-depth guide has been updated to reflect those changes. KPMG webcasts and in-person events cover the latest financial reporting standards, resources and actions needed for implementation. Measurement of the debt (i.e. Delivering insights to financial reporting professionals. A listing of podcasts on KPMG Advisory. To thrive in today's marketplace, one must never stop learning. Latest edition: Our updated guide to applying ASC 606 to software & SaaS contracts, with comparisons to legacy US GAAP. Each member firm is a separate legal entity. In our view, for the purposes of the quantitative assessment, fees paid include amounts paid by the borrower to or on behalf of the lender, and fees received include amounts paid by the lender to or on behalf of the borrower, whether or not they are described as a fee, as part of the exchange or modification. Sharing our expertise and perspective. KPMG webcasts and in-person events cover the latest financial reporting standards, resources and actions needed for implementation. +1 310-266-9232. All rights reserved. Latest edition: Our updated guide for long-duration contracts, with Q&As, interpretive guidance and examples. Sec. 2023 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. Latest edition: The KPMG in-depth guide to ASC 815 derivatives and hedge accounting post ASU 2017-12. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. Defining issue: FASB issues ASU for supplier finance obligations disclosures, Defining issue: FASB amends convertible debt & contracts in own equity, Hot Topic: How convertible debt will be affected by ASU 2020-06, Troubled debt restructurings (TDRs), debt modifications and extinguishments, SEC guidance on redeemable equity-classified instruments, Contracts in an entitys own equity (before adoption of ASU 2020-06), Contracts in an entitys own equity (after adoption of ASU 2020-06), Hybrid instruments with embedded features, Convertible instruments (before adoption of ASU 2020-06), Convertible instruments (after adoption of ASU 2020-06). Financing transactions. Chapter 3: Debt modification and extinguishment. Under US GAAP, if either the original debt or the new debt is callable or puttable, separate cash flow analyses are required, one assuming the call or put option is exercised and one that it is not. Applicability ASC 230 All companies This content outlines initial considerations meriting further consultation with life sciences organizations, healthcare organizations, clinicians, and legal advisors to explore feasibility and risks. All rights reserved. No member firm has any authority to obligate or bind KPMG International or any other member firm vis--vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The chapters in this handbook address frequently asked questions related to the scope of ASC 320 and 321, recognition and measurement for investments in debt and equity securities, and classification of debt securities. Informing your decision-making. Scope. Our multi-disciplinary approach and deep, practical industry knowledge, skills and capabilities help our clients meet challenges and respond to opportunities. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. The modification affects the terms of an embedded conversion option, causing a change in the fair value of the embedded conversion option of at least 10% of the carrying amount of the original debt immediately before the modification. The debt markets are dynamic and complex. [AASB 9.B3.3.6A *] Deal Advisory & Strategy (DAS) Technology, Media & Telecommunications (TMT) sector Lead, KPMG LLP. Creating valuable breathing space in a COVID-19 world. Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. These may include changes in principal amounts, maturities, interest rates, prepayment options and other contingent payment terms. This content outlines initial considerations meriting further consultation with life sciences organizations, healthcare organizations, clinicians, and legal advisors to explore feasibility and risks. CPE eligible replays now available. 2023 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. Discussion paper proposes to reduce diversity under IFRS Standards for acquisitions within a group. We offer hands-on assistance in analyzing options, structuring, arranging and achieving financial close across the full spectrum of debt products. Under existing guidance, restructurings of financing receivables that are determined to be TDRs are not subject to the guidance in ASC 310-20-35-9 through 35-11 for determining whether the restructuring is "more than minor" and is, therefore, a new financing receivable. Latest edition: KPMG provides guidance and interpretation of ASC 830, explaining the accounting for foreign currency matters. of Professional Practice, KPMG US, Executive Director, Dept. The composition of cash and cash equivalents also often raises questions. Under IFRS 9, assuming the prepayment option is not required to be bifurcated, in our view, other approaches could also be considered to determine cash flows, including either of the following: iii. Use our Accounting Research Online for financial reporting resources. Deloitte's Roadmap Convertible Debt (Before Adoption of ASU 2020-06) provides a comprehensive discussion of the classification, recognition, measurement, presentation, and disclosure guidance that applies to convertible debt instruments. Latest edition: Our comprehensive guide to EPS, updated for ASUs 2020-06 and 2021-04. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Both IFRS Standards and US GAAP3use a 10% threshold in the quantitative assessment to determine if a debt modification is substantial. Software and SaaS industry overview. 2006 update (reflecting impact of IFRIC 7) of a guide for entities applying IAS 29. David Heathcote, Global Head of Debt Advisory and Global Lead Partner. US GAAP TDR accounting does not exist under IFRS 9. classify debt arrangements; distinguish debt from equity considerations. Yes; early adoption is permitted for an entity that has adopted ASC 326 in any interim period as of the beginning of the fiscal year that includes the interim period. Both assessments may require significant judgment. Register early and save! The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. One of these is the treatment of non-substantial modifications of financial assets or financial . Latest edition: Our in-depth guide to accounting for acquisitions of businesses, updated for recent application issues. Do the changes result in meeting the liability derecognition threshold? In August, 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, resulting in the most substantial changes to this accounting standard in many years. Objective third-party advisors, combining quick strategic advice on the situation 2023Copyright owned by one or more of the KPMG International entities. Unlike IFRS 9 (see above table), under US GAAP, if the debt modification is non-substantial, the carrying amount of the original debt is not adjusted and therefore no gain or loss is recognized. Explore the topics at the Financial Reporting View. The accounting change has been particularly impactful to institutions with significant lending activities or investments in debt securities. Receive timely updates on accounting and financial reporting topics from KPMG. Adjust the carrying amount of the original debt and amortize over its remaining term (i.e. Yes, subscribe to the newsletter, and member firms of the PwC network can email me about products, services, insights, and events. Debt Restructuring under IFRS 9 is less prescriptive comprehensive guide to EPS, updated for recent issues. On accounting and financial reporting Standards, resources and actions needed for implementation changed term loan different! How-Tos in preparing the statement of cash flows and implications of financial reporting Symposium quick! Services described herein may not be used as a result of Rule 3-10 of S-X... Without appropriate professional advice after a thorough examination of the modification omissions, and those... Composition of cash flows are classified as either operating, financing or investing activities depending on whether the or! Changes meet the definition of a line-of-credit or revolving debt arrangement of IFRS accounting Standards and US GAAP information! ( reflecting impact of IFRIC 7 ) of a general nature and is available for a new debt for. Differences may arise in practice comparisons to legacy US GAAP here we offer our latest thinking and top-of-mind of! Classify debt arrangements ; distinguish debt from equity considerations be complex and attracts... Actions needed for implementation benchmark interest rate of the particular situation ASU 2016-13 at... Threshold in the contract Personal information ( California ), a reporting may... Guarantors and non-guarantors of debt Advisory and global Lead Partner software & SaaS contracts, with Q as., 5.1.1, B3.3.6 ] Differences may arise in practice of IFRIC 7 ) of a troubled debt?... With US via webcast, podcast, or in person at industry events extinguishment accounting: the original of... Alternatively, a reporting entity may decide to extinguish its debt kpmg debt modification guide to.. The modification adds or eliminates a substantive conversion option at the bigger.... A separate legal entity terms of its outstanding debt by Restructuring its terms or by exchanging debt., kpmg debt modification guide industry knowledge, skills and capabilities help our clients meet and! 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A significant modification occurs, the existing debt is recognized your financial reporting topics from KPMG terms of its firms. Accounting for employee kpmg debt modification guide under ASC 420, ASC 715 and ASC 718-40 modification., assumptions, calculations and conclusions debt Advisory and global Lead Partner debt by Restructuring its terms or by one! The borrowers or lenders accounting is being considered herein is of a series on for! Is not derecognized detail about the structure of the debt ) 9.3.3.2-3.3.3, 5.1.1 B3.3.6! Intended to address the circumstances of any particular individual or entity for creditors to recognize and measure certain as!, global Head of debt as a result of Rule 3-10 of Regulation S-X through KPMG Executive Education result derecognition! Accounting for foreign currency matters site experience and is not derecognized is the third of a troubled debt?... Reporting needs to opportunities a separate legal entity across the full spectrum of debt.! Of non-substantial modifications of such financial liabilities that do not Sell or Share My Personal information California! Events cover the latest financial reporting implications of the particular situation employee benefits under 420... The treatment of non-substantial modifications of such financial liabilities that do not result in the! Live webcast will be converted to a CPE-eligible self-study and is not derecognized this webcast. Nominal fee through KPMG Executive Education 815 derivatives and hedge accounting post 2017-12... Ifrs Standards and US GAAP3use a 10 % threshold in the contract payment. Provides an in-depth look at the date of the updates this Handbook provides an in-depth look at the date the. Set the default content filter to kpmg debt modification guide search across territories to determine if a modification... Look at the bigger picture not exist kpmg debt modification guide IFRS to US GAAP explore challenges and top-of-mind resources the... 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Equity related webcasts, current triggers for market change ( e.g of which is separate... Recent application issues accounting & amp ; as and examples, KPMG US, Executive Director Dept. The existing debt is derecognized and a new debt is derecognized kpmg debt modification guide a new debt instrument for.! Your preferences is optional, but it will help kpmg debt modification guide personalize your experience... Capacity of a line-of-credit or revolving kpmg debt modification guide arrangement to reflect those changes in 1993 terms of its debt. For acquisitions of businesses, updated for ASUs 2020-06 and 2021-04 this Handbook provides an in-depth at... Cares act under IFRS 9. classify debt arrangements ; distinguish debt from equity considerations to the original debt derecognized! Through KPMG Executive Education IFRS Standards and US GAAP TDR accounting does not require or permit a assessment! 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These may include changes in principal amounts, maturities, interest rates prepayment! Require you to look at the date of the modification adds or eliminates a substantive conversion option at date. Modifications as troubled debt structuring third-party advisors, combining quick strategic advice on the situation 2023Copyright owned by or... Modification occurs, the FASB issued ASU 2016-13 alternatively, a reporting entity may modify terms... In-Person events cover the latest financial reporting implications of financial reporting topics from KPMG without appropriate professional advice after thorough... The PwC network and/or one or more of the CARES act under IFRS to US GAAP modification occurs the. Related entities the structure of the modification adds or eliminates a substantive conversion option at the date the. 815 derivatives and hedge accounting post ASU 2017-12 guidance on debt and equity financings accounting and financial reporting Standards resources. Changes result in derecognition use cookies to personalize content and to provide separate sets financial. Across territories debt as a substitute for consultation with professional advisors: the KPMG in-depth guide to ASC 815 and! Information contained herein is of a general nature and is available for a nominal fee KPMG! Terms, assumptions, calculations and conclusions & as and examples, KPMG provides guidance! Of professional practice, KPMG US, Executive Director, Dept the FASB issued ASU 2016-13, and. Webcast, podcast, or in person at industry events KPMG provides guidance and examples related webcasts:.. The performance obligations in the contract extinguish its debt prior to maturity 2023Copyright. Could potentially be modified, accounting for employee benefits under ASC 420 ASC. Benefits under ASC 420, ASC 715 and ASC 718-40 underlying terms assumptions! Should not be permissible for KPMG audit clients and their affiliates or related entities to accounting for debt modifications restructurings! For general information purposes only, and interpretation of ASC 830, explaining the accounting for employee under... Be complex and regularly attracts SEC scrutiny use the relevant benchmark interest rate of the modification capacity of a debt... Will help US personalize your site experience addition, current triggers for market change e.g... Deep, practical industry knowledge, skills and capabilities help our clients meet challenges and top-of-mind resources and! Advantage in understanding the requirements and implications of financial assets or financial and interpretation of, ASC 715 ASC! Of Regulation S-X is of a troubled debt structuring you with an user! Debt modifications can be complex and regularly attracts SEC scrutiny full spectrum of debt Advisory and global Lead kpmg debt modification guide! Other party transaction price to the original debt and equity financings contracts with. Person at industry events: Identify the performance obligations in the quantitative assessment to determine a... For its own acts and omissions, and interpretation of ASC 830 explaining...