Under a Troubled Debt Restructuring That Results in a Modification

question 25

Multiple Choice

Under a troubled debt restructuring that results in a modification of terms the debtor will report interest expense when

• A) The debtor reports a gain on restructuring.
• B) The future cash flows under the restructuring agreement are less than the company's obligation at the date the restructuring takes place.
• C) Always because the troubled debtor has a new agreement that obligates the company to make payments in the future.
• D) The debtor reports no gain on restructuring.