Summary of Statement No. 15
Accounting by Debtors and Creditors for Troubled Debt Restructurings (Issued 6/77)
Summary
This Statement establishes standards of financial accounting and
reporting by the debtor and by the creditor for a troubled debt
restructuring. This Statement requires adjustments in payment terms
from a troubled debt restructuring generally to be considered
adjustments of the yield (effective interest rate) of the loan. So
long as the aggregate payments (both principal and interest) to be
received by the creditor are not les s than the creditor's carrying
amount of the loan, the creditor recognizes no loss, only a lower
yield over the term of the restructured debt. Similarly, the debtor
recognizes no gain unless the aggregate future payments (including
amounts contingently payable) are less than the debtor's recorded
liability.