In a Troubled Debt Restructuring Involving Only the Modification of Terms

question 28

Multiple Choice

In a troubled debt restructuring involving only the modification of terms of a loan receivable, how should the loan receivable be measured on the creditor's balance sheet?

• A)​The loan's observable market price.
• B)​The fair value of the collateral if the loan is collateral dependent.
• C)​The present value of expected future cash flows at the original contractual rate.
• D)​All of the above.

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Definitions:

Surplus II

An excess of supply over demand in the market, leading to excess goods and potential lower prices.

Consumer Surplus

The separation between the entire amount consumers are keen and financially able to expend on a good or service, and the amount they actually expend.

Surplus I

An excess of supply over demand, leading to a situation where the quantity of a good or service exceeds the quantity demanded at the current price.

Consumer Surplus

The difference between what consumers are willing to pay and what they actually pay for a good or service.