LTD Modification and Retirement F25-05b

Provide the debtor’s accounting treatment, when the troubled debt restructure is a settlement.

1. Gain is recognized for the difference between, the book value of the debt and fair value of the consideration. Loss is never recognized for this type of transaction.
2. Recognize gain or loss on sale of nonmonetary asset, used to settle the debt.
3. Record stocks at fair vale if used to settle the debt.
4. Remove the debt from the books.