For a Trouble Debt Restructuring Involving Only Modification of Terms

question 50

Multiple Choice

For a trouble debt restructuring involving only modification of terms, it is appropriate for a debtor to recognize a gain when the carrying amount of the debt

• A) Exceeds the total future cash payments specified by the new terms
• B) Is less than the total future cash payments specified by the new terms
• C) Exceeds the present value specified by the new terms
• D) Is less than the present value specified by the new terms

---

Definitions:

Marginal Cost

The added expense from making one more unit of a product or service.

Marginal Benefit

The extra advantage or happiness derived from the use of one more unit of a good or service.

Consumption

The use of goods and services by households or individuals, contributing to their utility and the overall demand in an economy.

Personal Bankruptcies

Legal processes in which individuals declare inability to pay back their debts, leading to potential asset liquidation or restructuring.