In a Troubled Debt Restructuring in Which the Debt Is

question 81

Multiple Choice

In a troubled debt restructuring in which the debt is continued with modified terms, a gain should be recognized at the date of restructure, but no interest expense should be recognized over the remaining life of the debt, whenever the

• A) carrying amount of the pre-restructure debt is less than the total future cash flows.
• B) carrying amount of the pre-restructure debt is greater than the total future cash flows.
• C) present value of the pre-restructure debt is less than the present value of the future cash flows.
• D) present value of the pre-restructure debt is greater than the present value of the future cash flows.

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Definitions:

Return on Investment

A measure of the financial gain or profitability of an investment relative to its cost, expressed as a percentage.

Accounts Payable Turnover Ratio

A financial metric that measures how quickly a business pays its suppliers; calculated as cost of goods sold divided by average accounts payable.

Vendors

Entities or individuals that supply goods or services to another company, often playing a crucial role in the supply chain.

Timely Manner

Completing or achieving something within the expected or allocated time.