Regarding Accounting for Troubled Debt,which of the Following Statements Is

question 35

Multiple Choice

Regarding accounting for troubled debt,which of the following statements is true?

• A) The treatment for troubled debt is the same under both U.S.GAAP and IFRS.
• B) The settlement of troubled debt results in an economic loss to the debtor because the creditor accepts more than the book value of the debt to settle the debt.
• C) U.S.GAAP uses a "10 percent rule" to determine whether a gain is recognized by the debtor in a troubled debt situation.
• D) Because IFRS uses the present value approach to determine the magnitude of the settlement for troubled debt, the magnitude of the new book value of the restructured debt will be lower and the gain recognition will be larger under IFRS.

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Definitions:

Operating Objectives

Short-term targets or goals that an organization seeks to meet as part of its daily operations, often specific and measurable.

Adaptive Organisation

An organization that is capable of adjusting and evolving its strategies, structures, and processes in response to changes in the environment.

High-quality Goods

Products that meet or exceed predetermined standards of excellence, including durability, usability, and performance.

Coal

A fossil fuel formed from the remains of plants that lived millions of years ago, used primarily for generating electricity and as a fuel source.