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:

Fibula

A long, thin bone located on the lateral side of the tibia in the lower leg.

Tibia

A large bone located in the lower leg, commonly known as the shinbone.

Patella

The knee cap; a small, round bone that sits in front of the knee joint, helping to protect it and enhance leverage for leg muscles.

Ischium

One of the three bones that make up the pelvis, helping to form the hip joint and bear the weight of the body in the sitting position.