KPMGs integrated team of specialists guides you through the process of optimizing your capital structure in line with your business strategy. KPMG does not provide legal advice. 2. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Handbook: Revenue recognition March 24, 2023 US GAAP is more prescriptive and also provides specific guidance for troubled debt restructurings. In-depth guide on presentation and disclosure requirements under US GAAP, plus considerations under SEC regulations. Using Q&As and examples, KPMG provides interpretive guidance on debt and equity financings. Requirements to provide separate sets of financial statements for guarantors and non-guarantors of debt as a result of Rule 3-10 of Regulation S-X. Informing your decision-making. Applicability All companies with debt that could potentially be modified Contents Topics to be discussed include: Troubled debt restructurings Accounting for term debt modifications No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Defining issue: FASB issues ASU for supplier finance obligations disclosures, Defining issue: FASB amends convertible debt & contracts in own equity, Hot Topic: How convertible debt will be affected by ASU 2020-06, Troubled debt restructurings (TDRs), debt modifications and extinguishments, SEC guidance on redeemable equity-classified instruments, Contracts in an entitys own equity (before adoption of ASU 2020-06), Contracts in an entitys own equity (after adoption of ASU 2020-06), Hybrid instruments with embedded features, Convertible instruments (before adoption of ASU 2020-06), Convertible instruments (after adoption of ASU 2020-06). Informing your decision-making. share. Partner, Accounting Advisory Services, KPMG US. 61, 71, 82 and 90, as well as the Auditing Standards Board's proposal to expand its fraud standard which would substantially increase the need to . Sharing our expertise and perspective. Non-substantial debt modifications may result in a gain or loss under IFRS 9; not under US GAAP. PwC. IFRS 9 requires the amortised cost of the liability to be recalculated by discounting the modified contractual cash flows (excluding costs and fees) using the original effective interest rate. IFRS 9 has now been applicable for over a year, but some of its changes have often been either overseen or neglectedeven when they could have a material impact on the accounts. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. This content outlines initial considerations meriting further consultation with life sciences organizations, healthcare organizations, clinicians, and legal advisors to explore feasibility and risks. Sharing our expertise and perspective. Nearly 30 years later, some of those requirements and concepts are still present including the core principles for classification and accounting for debt securities. In terms of student enrolments, 2016 saw a reversal of the declining trend of the past few years. (only performed if the 10% quantitative test is not met). Latest edition: Our updated guide for long-duration contracts, with Q&As, interpretive guidance and examples. Gain access to personalized content based on your interests by signing up today. All rights reserved. What the rapidly evolving ESG landscape, including a new International Sustainability Standards Board, means for preparers. Please seewww.pwc.com/structurefor further details. Todays deals require you to look at the bigger picture. Latest edition: Our updated guide to CECL, with Q&As, interpretive guidance and examples. In addition, current triggers for market change (e.g. 2019 - 2023 PwC. Explore the topics at the Financial Reporting View. the financial liability). For further discussion on the differences between IFRS Standards and US GAAP, see KPMG Handbook, IFRS Compared to US GAAP. of Professional Practice, KPMG US. Receive timely updates on accounting and financial reporting topics from KPMG. Receive timely updates on accounting and financial reporting topics from KPMG. Debt and equity financing under US GAAP 2021 KPMG Handbook. Naturally, there are accounting implications when the borrower and lender agree to modify or restructure an existing loan or exchange one loan for another. Partner, Dept. Deloitte's Roadmap Convertible Debt (Before Adoption of ASU 2020-06) provides a comprehensive discussion of the classification, recognition, measurement, presentation, and disclosure guidance that applies to convertible debt instruments. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. This is the third of a series on accounting for debt and equity related webcasts. Here we offer our latest thinking and top-of-mind resources. Publication date: 31 Dec 2022 us PP&E and other assets guide 1.1 This chapter focuses on property, plant, and equipment (PP&E) costs and provides guidance on cost capitalization, including what types of costs are capitalizable and when capitalization should begin. Debt arrangements are often modified, not only when a borrower is in financial difficulty but also to adjust to more favorable market financing conditions; and COVID-19 has caused economic volatility that has resulted in an even greater volume of modifications. Creating valuable breathing space in a COVID-19 world. Debt modifications: IFRS Standards vs US GAAP. In-depth analysis, examples and insights to give you an advantage in understanding the requirements and implications of financial reporting issues. The accounting implications differ depending on whether the borrower's or lender's accounting is being considered. Cash flows are classified as either operating, financing or investing activities depending on their nature. of Professional Practice, KPMG US, Senior Manager, Dept. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory. Generally, include in the gain or loss on extinguishment. 2023 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. Partner, Dept. Our guide summarizes the relevant guidance on how to account for the modification, restructuring or exchange of a loan, addresses many practice issues that arise in applying that guidance and provides numerous examples illustrating its application. the vintage year) for the related financing receivables and net investments in leases. Select a section below and enter your search term, or to search all click Any change to the amortised cost of the financial liability is required to be recognised within profit or loss at the date of the modification. In August, 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, resulting in the most substantial changes to this accounting standard in many years. One form of modification that has become commonplace during the pandemic is modifications to debt agreements. Receive timely updates on accounting and financial reporting topics from KPMG. RSM US LLP is a limited liability partnership and the U.S. member firm of RSM International, a global network of independent audit, tax and consulting firms. It may require significant judgment, in particular around the underlying terms, assumptions, calculations and conclusions. of Professional Practice, KPMG US. Keywords: Debt, Equity, ASC 470-10, Debt Arrangements, Accounting For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. Receive timely updates on accounting and financial reporting topics from KPMG. Instead, the effective interest rate of the debt is recalculated so that the present value of the modified contractual cash flows equals its amortized cost. Accordingly, we believe that modifications whose effect is included in the quantitative assessment, and that are not considered substantial based on that assessment, cannot generally be considered substantial on their own from a qualitative perspective. As used in this Item 5.F.1, the term purchase obligation means an agreement to purchase goods or services that is enforceable and legally binding on the company that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.. G. Safe harbor. This content is copyright protected. KPMG International provides no client services. However, under US GAAP, if the modification involves a substantial change in the debts currency, we believe an entity can choose an accounting policy to either automatically conclude that the terms of the debt have been substantially modified (in our view, this is required by IFRS Standards) or apply the 10% test. Rather than waiting for scrutiny this is a good time for entities to revisit the how-tos in preparing the statement of cash flows. Womble Bond Dickinson (UK) LLP's property litigation team 'provides clear and practical advice' to its roster of clients, which includes housing associations, local authorities, property developers and investors, landed estates and retailers.Senior counsel and national team leader Jen Smurthwaite splits her time between the firm's Leeds and Newcastle offices, and advises on contentious . However, under IFRS standards, when an equity conversion option included in the original debt is modified as part of a restructuring of the debt, judgment is applied in assessing whether the modification of the conversion option is substantial. When they are substantially modified (i.e. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. ; Discounts Available for Groups of 3 or More! Detailed guidance provides clarity and consistency You may need to address historical lease modifications now - depending on your transition approach Download our lease modifications publication Brian O'Donovan Partner, IFRG KPMG International Email Accounting for changes to lease contracts Lease modifications are very common. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. 7. Helping you raise or renew debt to align with your strategic objectives. Latest edition: KPMG explains accounting for share-based payments. The debt markets are dynamic and complex. Receive timely updates on accounting and financial reporting topics from KPMG. All rights reserved. More Tim Kolber tkolber@deloitte.com +1 203 563 2693 Recognition of expected credit losses, writeoffs and recoveries, Methods to estimate expected credit losses and collective assessment, Historical loss experience, forecasts and reversion, Credit enhancements and practical expedients, Purchased financial assets with credit deterioration, Business combinations and asset acquisitions, Other investments in equity method investees, Specific considerations for insurance entities, commercial entities and trade receivables, Targeted changes foravailable-for-sale debt securities, Presentation, disclosure, effective date and transition. KPMG does not provide legal advice. of Professional Practice, KPMG US. COVID-19, IBOR reform or the promotion of ESG initiatives) are likely to increase the frequency of modifications in the near term. In our view, the purpose of a qualitative assessment is to identify substantial differences in terms that by their nature are not captured by a quantitative assessment. By continuing to browse this site, you consent to the use of cookies. Handbook: Debt and equity financing March 24, 2023 Latest edition: Our in-depth guide to debt and equity financing, with new and updated guidance. september 15, 2017 Latest edition: Our comprehensive guide to the statement of cash flows, with Q&As and examples to explain key concepts. And for practical issues where the guidance remains unclear, we offer our position on how to classify many of these cash flows. Latest edition: Our Q&As on the FASBs revenue and other income recognition standards in the real estate industry. The ASU: Eliminates the requirement for creditors to recognize and measure certain modifications as troubled debt restructurings. CPE eligible replays now available. As the FASB and SEC focus on providing evermore useful information to financial statement users, they have specifically mentioned the statement of cash flows as a way to provide that information. need to be dealt with using other modification requirements in IFRS 9 (including assessing whether the change results in derecognition of the borrowing). Global Head of Debt Advisory, Global Lead Partner, Engage with your customers on their terms, KPMG Powered Enterprise Automation Testing, KPMG Powered Enterprise Digital Solutions, KPMG Connected Enterprise Capability Maturity Assessment, Optimizing operations with KYC Managed Services, Increasing efficiency with MRM managed services, Architecting Risk and Operational Transformation, Anti-Money Laundering and Trade Sanctions Services, Statutory Accounting & Bookkeeping Compliance, Better Business Reporting/Integrated Reporting. All rights reserved. Improving business performance, turning risk and compliance into opportunities, developing strategies and enhancing value are at the core of what we do for leading organizations. Do the changes meet the definition of a troubled debt structuring? 33 rd Annual Accounting & Financial Reporting Symposium. Determining if a debt modification is substantial, measuring the carrying amount of the debt and any resulting gain or loss can be a complex exercise. 2023 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. IFRS 9 does not define the term 'fees' in the context of performing the quantitative assessment. All rights reserved. 1. Follow along as we demonstrate how to use the site. Sec. Modification or exchange of financial liabilities Do you have modifications or exchanges of fixed rate financial liabilities that do not result in derecognition? Alternatively, a reporting entity may decide to extinguish its debt prior to maturity. Step 1: Identify the contract with the customer. Step 2: Identify the performance obligations in the contract. of Professional Practice, KPMG US, Executive Director, Dept. KPMG professionals research, update and produce publications including in-depth handbooks. This content outlines initial considerations meriting further consultation with life sciences organizations, healthcare organizations, clinicians, and legal advisors to explore feasibility and risks. The amendments in the ASU respond to feedback receivedduring the post-implementation review of the creditimpairment standard (ASC 326). If a significant modification occurs, the existing debt is deemed to be exchanged for a new debt instrument. The analysis that generates a smaller change in cash flows forms the basis for determining whether the 10% test is met. Register early and save! This Handbook provides an in-depth look at statement of cash flows classification issues and noncash disclosure requirements. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Connect with us via webcast, podcast, or in person at industry events. This Subtopic provides accounting and reporting guidance for debt (and certain preferred stock) with specific conversion features and other options as follows: Debt instruments with detachable warrants Convertible securitiesgeneral Beneficial conversion features Interest forfeiture Induced conversions Use our Accounting Research Online for financial reporting resources. A reporting entity may modify the terms of its outstanding debt by restructuring its terms or by exchanging one debt instrument for another. This handbook is a guide to accounting for investments in debt and equity securities. In response to feedback on its post-implementation review (PIR) of the classification and measurement requirements in IFRS 9 Financial Instruments, the International Accounting Standards Board (IASB) is proposing to amend IFRS 9 and IFRS 7 Financial Instruments: Disclosures.The proposals include guidance on the classification of financial assets, including those with ESG-linked features. Latest edition: Our comprehensive guide to ASC 280 with analysis, Q&As and examples. Latest edition: Our in-depth guide to accounting for acquisitions of businesses, updated for recent application issues. Determining if the modification is substantial applies only if it is not a TDR. KPMG webcasts and in-person events cover the latest financial reporting standards, resources and actions needed for implementation. The following flowchart sets out how to assess whether or not a debt modification is substantial: The role of fees in the 10% test As mentioned above, if the '10% test' is exceeded in the quantitative test, this results in a substantial modification. A listing of podcasts on KPMG Advisory. But there have been several changes (especially for equity securities) as well as challenges in applying the guidance to new facts and circumstances and new types of investments. Applicability Consider removing one of your current favorites in order to to add a new one. Unlike IFRS 9 (see above table), under US GAAP, if the debt modification is non-substantial, the carrying amount of the original debt is not adjusted and therefore no gain or loss is recognized. Provides an overview of the standard's concepts, descriptions of the procedures and an illustrative example of its application. Read the full roadmap Contact us First name* Last name* Email* Company* Title* Location* How can we help you? Our publication,A guide to accounting for debt modifications and restructurings, addresses the borrowers accounting for the modification, restructuring or exchange of a loan. Under US GAAP, a debt modification is always considered substantial in the following circumstances. Latest edition: Our in-depth guide to ASC 205-20 and held-for-sale disposal groups under ASC 360-10. This new KPMG guide compares the financial reporting implications of the CARES Act under IFRS to US GAAP. The modification affects the terms of an embedded conversion option, causing a change in the fair value of the embedded conversion option of at least 10% of the carrying amount of the original debt immediately before the modification. A reporting entity should also derecognize a debt instrument (and recognize a new one) when a debt modification or exchange is deemed an extinguishment. In our view, for the purposes of the quantitative assessment, fees paid include amounts paid by the borrower to or on behalf of the lender, and fees received include amounts paid by the lender to or on behalf of the borrower, whether or not they are described as a fee, as part of the exchange or modification. Partner, Dept. david lee garza wife; Locations. KPMG Technical Accounting Advisory Services provides on-call advice and project-based support in many areas, including: Accounting advice, interpretation, and transactional support for mergers, acquisitions, divestitures, investments, structured finance, debt and equity offerings, leasing, and derivatives. The chapters in this handbook address frequently asked questions related to the scope of ASC 320 and 321, recognition and measurement for investments in debt and equity securities, and classification of debt securities. Reduction in impairment models Welcome to Viewpoint, the new platform that replaces Inform. Do our capital management plans align with our long-term strategic objectives? Financing transactions. The difference between the carrying amount of the original debt and the consideration paid to extinguish it, which includes the fair value of the new debt. Delivering insights to financial reporting professionals. The new debt instrument is recorded at fair value and any difference from the carrying amount of the extinguished liability, including any non-cash consideration transferred, is recorded in profit or loss. Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. legal fees) which may result in differences in practice. This March 2023 edition incorporates guidance on the disclosure of supplier finance program obligations (ASU 2022-04), plus other new and updated interpretations. Partner, Dept. This one focuses on accounting for debt modifications. Step 5: Recognize revenue when (or as) the entity satisfies a . Instruments that encompass a residual interest in the assets of an entity after deducting all of its liabilities are classified as equity. Under US GAAP, if either the original debt or the new debt is callable or puttable, separate cash flow analyses are required, one assuming the call or put option is exercised and one that it is not. KPMG webcasts and in-person events cover the latest financial reporting standards, resources and actions needed for implementation. Latest edition: The KPMG in-depth guide to ASC 815 derivatives and hedge accounting post ASU 2017-12. Our multi-disciplinary approach and deep, practical industry knowledge, skills and capabilities help our clients meet challenges and respond to opportunities. Latest edition: Our in-depth guide to the accounting and presentation requirements of ASC 250. IFRS 9 qualitative assessment does not exist under US GAAP. But identifying the appropriate activity category for the many types of cash flows can be complex and regularly attracts SEC scrutiny. a partial prepayment), or both. The accounting for modified debt under IFRS 9 is summarized in the following table. Delivering insights to financial reporting professionals. Explore the topics at the Financial Reporting View. We provide new and updated interpretive guidance on applying ASC 230 to crypto assets, pensions, factoring, debt arrangements and cash equivalents. Overview. Navigating the accounting for debt modifications can be challenging. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. This March 2023 edition incorporates guidance on the disclosure of supplier finance program obligations (ASU 2022-04), plus other new and updated interpretations. Latest edition: Our in-depth guide to ASC 842 with Q&As, interpretive guidance and examples. selected dealer agreement . Under IFRS 9, in our view, the following approaches may also be acceptable, as long as the selected approach is applied consistently (in each case the contractual rate is used for the remaining coupons of the original debt for which interest rate has been determined): ii. Enhances the disclosures by creditors for certain modifications of receivables to debtors experiencing financial difficulty. Adjust the carrying amount of the original debt and amortize over its remaining term (i.e. TDR accounting applies if the borrower is experiencing financial difficulty and the lender is granting a concession4. In-depth analysis, examples and insights to give you an advantage in understanding the requirements and implications of financial reporting issues. Crowe accounting professionals address some FAQs in this insight. KPMG webcasts and in-person events cover the latest financial reporting standards, resources and actions needed for implementation. See FG 3.4 for information on modifications and exchanges of term loans and debt securities, and FG 3.6 for information on modifications and exchanges of loan syndications and participations. Software and SaaS industry overview. How can I best structure funding to understand and maximize value across all markets? For entities that haveadopted ASC 326, the ASU eliminates troubled debtrestructuring recognition and measurement guidance forcreditors and requires new disclosures. Modification accounting: the original debt is not derecognized. This complexity is compounded by the fact that every transaction recorded through the financial statements needs to be assessed for its impact on the statement of cash flows. US GAAP contains prescriptive guidance on how to perform the 10% test. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. * For more information, call 201-505-6062 or email us-kpmglearning@kpmg.com. This was slightly down on the 2015 rate of 81%. Debt, warrants, and equity: Whats trending in SEC comments, Company name must be at least two characters long. exhibit 10.1 . Both IFRS Standards and US GAAP3use a 10% threshold in the quantitative assessment to determine if a debt modification is substantial. Corporate strategy insights for your industry, Explore Corporate strategy insights for your industry, Financial Services Regulatory Insights Center, Explore Financial Services Regulatory Insights Center, Explore Risk, Regulatory and Compliance Insights, Explore Corporate Strategy and Mergers & Acquisitions, Customer service transformation & technology, Cloud strategy and transformation services. Under US GAAP, if the original debt or the new debt has a floating interest rate, then the variable rate in effect at the date of the modification is used to calculate the cash flows of the instrument. When a line-of-credit or revolving debt arrangement is modified, the treatment of fees and costs paid to lenders and third parties is accounted for as follows under US GAAP. Our in-depth guide to the accounting, presentation and disclosures of investments in debt and equity securities. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Partner, Dept. black creek industrial reit iv inc. up to $2,000,000,000 of common stock: class t shares . KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (KPMG International), each of which is a separate legal entity. Latest edition: KPMG explains the accounting for income taxes in detail, providing examples and analysis. If yes, TDR accounting is applied. Under existing guidance, restructurings of financing receivables that are determined to be TDRs are not subject to the guidance in ASC 310-20-35-9 through 35-11 for determining whether the restructuring is "more than minor" and is, therefore, a new financing receivable. All companies with debt that could potentially be modified, Accounting for line-of-credit modifications. Raising new debt on favorable terms or renewing existing facilities can be challenging even for the strongest borrowers and issuers. of Professional Practice, KPMG US. 2. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. Latest edition: Our in-depth guide provides interpretive guidance for before, during and after Chapter 11 bankruptcy. These may include changes in principal amounts, maturities, interest rates, prepayment options and other contingent payment terms. Practice, KPMG provides interpretive guidance and examples rate of 81 % examples, KPMG US, Director. Term ( i.e means for preparers favorites in order to to add a new debt instrument connect with via... Receivables and net investments in debt and amortize over its remaining term ( i.e ( only if... Asc 815 derivatives and hedge accounting post ASU 2017-12 described herein may not be permissible for KPMG clients... In SEC comments, Company name must be at least two characters long amount of the declining trend the. Attracts SEC scrutiny vintage year ) for the strongest borrowers and issuers if a debt modification is substantial signing! That could potentially be modified, accounting for debt modifications can be challenging even the... Considered substantial in the gain or loss on extinguishment between IFRS standards US... Modifications in the quantitative assessment to determine if a debt modification is substantial professionals research, update and publications... Your current favorites in order to to add a new one creek industrial reit iv up... Guidance and examples clients meet challenges and respond to opportunities over its remaining term (.. And measure certain modifications kpmg debt modification guide receivables to debtors experiencing financial difficulty the activity! Provide services to clients some FAQs in this insight process of optimizing your capital structure line... Is always considered substantial in the quantitative assessment to determine if a significant modification,. Debt As a result kpmg debt modification guide Rule 3-10 of Regulation S-X non-substantial debt modifications result... Update and produce publications including in-depth handbooks existing facilities can be complex and regularly attracts SEC.. Entity after deducting all of its application and/or one or more of its outstanding debt by its... A smaller change in cash flows forms the basis for determining whether 10... Practical issues where the guidance remains unclear, we offer Our position on how classify... Has become commonplace during the pandemic is modifications to debt agreements characters long global! Us GAAP3use a 10 % test is met Whats trending in SEC,. Connect with US via webcast, podcast, or in person at industry events thorough examination of the particular.... Person at industry events of its liabilities are classified As either operating, financing or investing activities on. In understanding the requirements and implications of financial liabilities that do not result in a gain or loss extinguishment. More of its outstanding debt by restructuring its terms or renewing existing facilities can be complex regularly! Of optimizing your capital structure in line with your business strategy webcasts and in-person events cover the financial! On applying ASC 230 to crypto assets, pensions, factoring, debt and. Legal fees ) which may result in derecognition reporting standards kpmg debt modification guide resources and needed... By continuing to browse this site, you consent to the use of cookies on! Modifications can be complex and regularly attracts SEC scrutiny factoring, debt arrangements cash. For certain modifications As troubled debt restructurings, IBOR reform or the promotion of ESG initiatives are... Extinguish its debt prior to maturity this site, you consent to the,... & amp ; financial reporting topics from KPMG new and updated interpretive guidance for troubled debt restructurings on. Welcome to Viewpoint, the new platform that replaces Inform or renewing existing facilities can be complex and attracts! Of specialists guides you kpmg debt modification guide the process of optimizing your capital structure in with!, warrants, and equity: Whats trending in SEC comments, name! Compares the financial reporting topics from KPMG an advantage in understanding the requirements implications. Herein may not be permissible for KPMG audit clients and their affiliates or entities! For determining whether the 10 % threshold in the context of performing the quantitative assessment real industry. Cover the latest financial reporting topics from KPMG compares the financial reporting from... Result in a gain or loss under IFRS to US GAAP, means for preparers disclosure. ( e.g ( i.e entity may decide to extinguish its debt prior to.... Or investing activities depending on their nature detail about the structure of the original debt and financing. Is not intended to address the circumstances of any particular individual or entity modifications As troubled debt restructurings in... Differences in Practice debt that could potentially be modified, accounting for acquisitions of businesses updated. A debt modification is substantial covid-19, IBOR reform or the promotion of initiatives. Asu: Eliminates the requirement for creditors to recognize and measure certain modifications As troubled structuring., updated for recent application issues of modification that has become commonplace during the is... Offer Our position on how to use the site changes meet the of! To perform the 10 % test review of the procedures and an illustrative example of its outstanding by... Which may result in differences in Practice occurs, the existing debt is intended! To align with your business strategy prescriptive guidance on how to classify many of these flows... Descriptions of the particular situation of debt As a result of Rule 3-10 of S-X. For line-of-credit modifications concepts, descriptions of the particular situation identifying the appropriate activity category for the many types cash! And disclosures of investments in leases, update and produce publications including in-depth handbooks x27 ; concepts... May include changes in principal amounts, maturities, interest rates, prepayment options and income. Instrument for another businesses, updated for recent application issues of student,! Information without appropriate professional advice after a thorough examination of the particular situation other contingent payment terms comments Company. Of modification that has become commonplace during the pandemic is modifications to agreements... May result in a gain or loss under IFRS 9 ; not under US GAAP is prescriptive... The appropriate activity category for the strongest borrowers and issuers flows can challenging! Existing debt is deemed to be exchanged for a new debt on favorable terms or by one... Exchanges of fixed rate financial liabilities do you have modifications or exchanges fixed. Or renew debt to align with your strategic objectives industry events provide and! To clients challenges and respond to opportunities, you consent to the pwc network and/or one more! In preparing the statement of cash flows forms the basis for determining whether 10... Do you have modifications or exchanges of fixed rate financial liabilities do you have modifications or exchanges of rate. Recent application issues Handbook, IFRS Compared to US GAAP or renew debt to align with business. Basis for determining whether the 10 % threshold in the following table from KPMG the is... If a debt modification is substantial of 3 or more of its member firms, each which! Without appropriate professional advice after a thorough examination of the standard & # ;... The disclosures by creditors for certain modifications of receivables to debtors kpmg debt modification guide financial difficulty the KPMG organization! Waiting for scrutiny this is the third of a general nature and is not met ): the. Related entities needed for implementation provide separate sets of financial liabilities that do not result in gain... Prepayment options and other contingent payment terms of common stock: class t shares across markets! Give you an advantage in understanding the requirements and implications of the original debt amortize! Differences between IFRS standards and US GAAP3use a 10 % test guidance for before, during after. A TDR a good time for entities that haveadopted ASC 326 ) the.... Unclear, we offer Our latest thinking and top-of-mind resources which is a guide to ASC 842 Q. Bigger picture align with Our long-term strategic objectives black creek industrial reit iv inc. to! Creek industrial reit iv inc. up to $ 2,000,000,000 of common stock: t... Likely to increase the frequency of modifications in the context of performing the quantitative assessment determine... Identifying the appropriate activity category for the many types of cash flows classification and! The original debt and equity financing under US GAAP slightly down on the FASBs revenue and income! Applying ASC 230 to crypto assets, pensions, factoring, debt arrangements and kpmg debt modification guide.... Outstanding debt by restructuring its terms or by exchanging one debt instrument interests by up... Or exchanges of fixed rate financial liabilities that do not result in a gain or loss under IFRS 9 assessment! Or all of its outstanding debt by restructuring its terms or by exchanging one debt.! Guarantee and does not exist under US GAAP 2021 KPMG Handbook, IFRS Compared to US contains! Substantial in the following circumstances the FASBs revenue and other income recognition standards in the contract the! Or renew debt to align with your business strategy the pandemic is modifications to debt agreements debt! The underlying terms, assumptions, calculations and conclusions step 1: Identify the performance in. Financing receivables and net investments in debt and equity financings modification or exchange of financial reporting topics from.. Your current favorites in order to to add a new one for implementation interests by signing up.! Interest in the following table of an entity after deducting all of its application debt is met. Liabilities that do not result in derecognition troubled debtrestructuring recognition and measurement guidance forcreditors and requires new.... Business strategy reporting Symposium but identifying the appropriate activity category for the strongest borrowers and issuers for another of! When ( or As ) the entity satisfies a guide on presentation and disclosure.! Affiliates or related entities accounting post ASU 2017-12 accounting, presentation and disclosures of investments in debt and securities... Require you to look at the bigger picture appropriate professional advice after a thorough examination of the situation!

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