In a Debt Extinguishment in Which the Debt Is Continued

question 39

Multiple Choice

In a debt extinguishment in which the debt is continued with modified terms and the carrying value of the debt is more than the fair value of the debt,

• A)a loss should be recognized by the debtor.
• B)a new effective-interest rate must be computed.
• C)a gain should be recognized by the debtor.
• D)no interest expense should be recognized in the future.