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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. 3. Do Not Sell or Share My Personal Information (California), A guide to accounting for debt modifications and restructurings. In addition, current triggers for market change (e.g. Do the changes make a new or changed term loan substantially different from the old term loan? 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. When they are substantially modified (i.e. Sec. Connect with us via webcast, podcast, or in person at industry events. Raising new debt on favorable terms or renewing existing facilities can be challenging even for the strongest borrowers and issuers. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. If yes, TDR accounting is applied. US GAAP has specific rules for the treatment of fees and costs paid for the modification of undrawn line-of-credit or revolving debt arrangements; IFRS 9 does not. Are you still working? Latest edition: KPMG in-depth guide to impairment testing, covering the models in ASC 350-20, ASC 350-30 and ASC 360. Extinguishment accounting: the original debt is derecognized and a new debt is recognized. Overview. In-depth analysis, examples and insights to give you an advantage in understanding the requirements and implications of financial reporting issues. When the borrowing capacity increases or remains the same, all such fees or costs (including unamortized deferred costs as well as costs paid at the time of modification) are deferred and amortized over the term of the new arrangement. 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. Partner, Dept. 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. 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. We walk you through available accounting options so that you can make the choice that is right for you. 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. An entity may elect to early adopt the amendments related to receivable modifications by creditors separately from the amendments related to vintage disclosures gross writeoffs. When the borrowing capacity decreases, fees or costs paid at the time of the modification are deferred and amortized over the term of the new arrangement. This content outlines initial considerations meriting further consultation with life sciences organizations, healthcare organizations, clinicians, and legal advisors to explore feasibility and risks. You can set the default content filter to expand search across territories. 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. KPMG Advisory Podcast Index page. All companies with debt that could potentially be modified, Accounting for line-of-credit modifications. a partial prepayment), or both. The University's total enrolments exceeded . The modification adds or eliminates a substantive conversion option at the date of the modification. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Explore the topics at the Financial Reporting View. This March 2023 edition incorporates guidance on the disclosure of supplier finance program obligations (ASU 2022-04), plus other new and updated interpretations. 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. 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. of Professional Practice, KPMG US. Register early and save! We intend to continue the dialogue updating our guidance to provide our insights on issues that arise. Sharing our expertise and perspective. Refer to Appendix D of the publication for a summary of the updates. IFRS 3R: Impact on earnings - the crucial Q&A for decision-makers Guide aimed at finance directors, financial controllers All rights reserved. The FASB has issued guidance deferring the effective dates for SEC filers that are eligible to be smaller reporting companies, non-SEC filers, and other private companies, including not-for-profits and employee benefit plans. 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. Costs and fees incurred in the modification. This latest edition includes guidance on ASU 2022-02 (troubled debt restructurings and vintage disclosures), with new interpretations and examples based on experience with companies implementing ASC 326. 2006 update (reflecting impact of IFRIC 7) of a guide for entities applying IAS 29. Unlike IFRS 9, US GAAP does not require or permit a qualitative assessment if the 10% quantitative test is not met. In-depth analysis, examples and insights to give you an advantage in understanding the requirements and implications of financial reporting issues. Find out what KPMG can do for your business. 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. Nonbanks that have yet to adopt the guidance should (1) focus on identifying which financial instruments and other assets are subject to the CECL model and (2) evaluate whether they need to make changes to existing credit impairment models to comply with the new standard. To thrive in today's marketplace, one must never stop learning. The debt markets are dynamic and complex. Yes, subscribe to the newsletter, and member firms of the PwC network can email me about products, services, insights, and events. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. Do our capital management plans align with our long-term strategic objectives? For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. Our in-depth guide to accounting for employee benefits under ASC 420, ASC 710, ASC 712, ASC 715 and ASC 718-40. Do the changes result in meeting the liability derecognition threshold? 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 . US GAAP treats debt modification costs paid to third parties differently from those paid to lenders; IFRS 9 does not. 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. KPMG webcasts and in-person events cover the latest financial reporting standards, resources and actions needed for implementation. KPMG does not provide legal advice. All rights reserved. Here we offer our latest thinking and top-of-mind resources. of Professional Practice, KPMG US. Use our Accounting Research Online for financial reporting resources. Delivering insights to financial reporting professionals. Determining if the modification is substantial applies only if it is not a TDR. Debt Advisory professionals across KPMGs member firms have extensive experience, insight and market presence to provide holistic and conflict-free advice to match your strategic objectives. This may be due to a number of reasons, including changes in interest rates, credit rating, or its capital needs. KPMG experts and professionals continually research, update and produce many publications. A debt modification may be accounted for as (1) the extinguishment of the existing debt and the issuance of new debt, or (2) a modification of the existing debt, depending on the extent of the changes. 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. Informing your decision-making. #Audit #kpmgfrv Our FRD publication on exit or disposal cost obligations has been updated to clarify and enhance our interpretative guidance. 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. US GAAP contains prescriptive guidance on how to perform the 10% test. KPMG does not provide legal advice. We have created a thought leadership platform to help you address the ever-increasing and complex marketplace challenges and drive inorganic growth in a globally connected economy. of Professional Practice, KPMG US, Senior Manager, Dept. This requires our clients to constantly appraise the nature of their present banking relationships, evaluate alternative pools of capital, understand their true cost of capital and approach financing in the context of an effective overall capital management strategy. No member firm has any authority to obligate or bind KPMG International or any other member firm vis--vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. of Professional Practice, KPMG US, Executive Director, Dept. [IFRS 9.3.3.2-3.3.3, 5.1.1, B3.3.6] Applicability All entities Relevant dates Effective immediately Report contents IFRS 9 does not have similar guidance. We offer hands-on assistance in analyzing options, structuring, arranging and achieving financial close across the full spectrum of debt products. because the modification is deemed non-substantial), any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability. This content outlines initial considerations meriting further consultation with life sciences organizations, healthcare organizations, clinicians, and legal advisors to explore feasibility and risks. Potentially misunderstood and often an afterthought when financial statements are being prepared, it provides key information about an entitys financial health and its capacity to generate cash. Navigating the accounting for debt modifications can be challenging. Reg. Use our Accounting Research Online website for financial reporting resources. If not, the accounting outcomes depend on whether the nontroubled modification is substantial, similar to IFRS Standards. Connect with us via webcast, podcast or in person/virtual at industry conferences. 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. This latest edition includes guidance on ASU 2022-02 (troubled debt restructurings and vintage disclosures), with new interpretations and examples based on experience with companies implementing ASC 326. Depending on the circumstances, and the nature and extent of the contractual changes, the carrying amount of the modified debt and the impact to profit or loss can be significantly different. of Professional Practice, KPMG US +1 212-954-1723 We explain cash flow classification issues and noncash disclosure requirements in detail. Latest edition: Side-by-side comparison of IFRS Accounting Standards and US GAAP. Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory. Our multi-disciplinary approach and deep, practical industry knowledge, skills and capabilities help our clients meet challenges and respond to opportunities. Like IFRS 9, under US GAAP, the accounting for fees and costs incurred in a debt modification depends on whether the modification is substantial. Welcome to Viewpoint, the new platform that replaces Inform. Our in-depth guide to the accounting, presentation and disclosures of investments in debt and equity securities. KPMG does not provide legal advice. of Professional Practice, KPMG US, Executive Director, Dept. Delivering insights to financial reporting professionals. ; Discounts Available for Groups of 3 or More! Modification or exchange of financial liabilities Do you have modifications or exchanges of fixed rate financial liabilities that do not result in derecognition? In-depth guide on presentation and disclosure requirements under US GAAP, plus considerations under SEC regulations. Any costs or fees incurred are generally included in profit or loss, too. A gain or loss should be recognised in profit or loss for modifications of such financial liabilities that do not result in derecognition. Latest edition: Our comprehensive guide to managements going concern assessment. KPMG International entities provide no services to clients. Cash flows are defined as net of any fees paid and/or received2 and are discounted using the effective interest rate of the original debt. Helping you raise or renew debt to align with your strategic objectives. * For more information, call 201-505-6062 or email us-kpmglearning@kpmg.com. Using Q&As and examples, KPMG provides interpretive guidance on debt and equity financings. Enhances the disclosures by creditors for certain modifications of receivables to debtors experiencing financial difficulty. Scope. Explore the topics at the Financial Reporting View. Reduction in impairment models KPMG webcasts and in-person events cover the latest financial reporting standards, resources and actions needed for implementation. <link rel="stylesheet" href="styles.942f46a3096a301aeaef.css"> KPMG does not provide legal advice. share. KPMG in-depth guide to accounting for software and website costs under ASC 350-40, ASC 350-50 and ASC 985-20. IFRS 9 provides no specific guidance in such a scenario and each modification is assessed separately. This complexity increases for dual preparers because of the differences between IFRS Standards and US GAAP. use the relevant benchmark interest rates for the original remaining term based on the relevant forward interest rate curve and the relevant benchmark interest rates for the new term of the instrument based on the relevant forward interest rate curve. Explore the topics at the Financial Reporting View. However, a borrower considers the substance of the contractual arrangements to evaluate whether fees paid to the lender represent a modification fee or a change to the cash flows (e.g. Keywords: Debt, Equity, ASC 470-10, Debt Arrangements, Accounting 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. In our view such a modification is also substantial under IFRS Standards. But identifying the appropriate activity category for the many types of cash flows can be complex and regularly attracts SEC scrutiny. IFRS 9 qualitative assessment does not exist under US GAAP. Receive timely updates on accounting and financial reporting topics from KPMG. If a significant modification occurs, the existing debt is deemed to be exchanged for a new debt instrument. This live webcast will be converted to a CPE-eligible self-study and is available for a nominal fee through KPMG Executive Education. Applicability 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. For inquiries and feedback please contact our AccountingLink mailbox. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. 2. Financing transactions. Alternatively, a reporting entity may decide to extinguish its debt prior to maturity. This content outlines initial considerations meriting further consultation with life sciences organizations, healthcare organizations, clinicians, and legal advisors to explore feasibility and risks. How can I best structure funding to understand and maximize value across all markets? 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. Sharing our expertise and perspective. In June 2016, the FASB issued ASU 2016-13. Follow along as we demonstrate how to use the site. Partner, Accounting Advisory Services, KPMG US. 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. Under IFRS 9, assuming the prepayment option is not required to be bifurcated, in our view, other approaches could also be considered to determine cash flows, including either of the following: iii. Delivering insights to financial reporting professionals. 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. Latest edition: Our in-depth guide to ASC 842 with Q&As, interpretive guidance and examples. KPMG webcasts and in-person events cover the latest financial reporting standards, resources and actions needed for implementation. 61 KPMG has sold an equity interest in KPMG Consulting to Cisco Corporation 62 and is in the process of registering additional shares in its consulting business to sell to the . Get the latest KPMG thought leadership directly to your individual personalized dashboard. And for practical issues where the guidance remains unclear, we offer our position on how to classify many of these cash flows. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Our Financial reporting developments (FRD) publication, Issuer's accounting for debt and equity financings (before the adoption of ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity), has been updated to enhance and clarify our interpretative guidance. This Handbook provides an in-depth look at statement of cash flows classification issues and noncash disclosure requirements. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Using Q&As and examples, KPMG provides interpretive guidance on debt and equity financings. 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. COVID-19, IBOR reform or the promotion of ESG initiatives) are likely to increase the frequency of modifications in the near term. What are my restructuring and recapitalization options. 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. Todays deals require you to look at the bigger picture. Discover what makes RSM the first choice advisor to middle market leaders, globally. 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. Both assessments may require significant judgment. Receive timely updates on accounting and financial reporting topics from KPMG. of Professional Practice, KPMG US. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. A reporting entity may modify the terms of its outstanding debt by restructuring its terms or by exchanging one debt instrument for another. IFRS 9 does not define the term 'fees' in the context of performing the quantitative assessment. 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). Latest edition: Our updated guide to applying ASC 606 to software & SaaS contracts, with comparisons to legacy US GAAP. Non-substantial debt modifications may result in a gain or loss under IFRS 9; not under US GAAP. Differences may arise in practice. david lee garza wife; Locations. The composition of cash and cash equivalents also often raises questions. The underlying principles in Topic 230 (Statement of Cash Flows) seem straightforward. Each member firm is responsible only for its own acts and omissions, and not those of any other party. 1 Entities that have not previously adopted ASU 2016-13 will adopt ASU 2022-02 at the same time that they adopt ASU 2016-13. This one focuses on accounting for debt modifications. David Heathcote, Global Head of Debt Advisory and Global Lead Partner. 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. 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 . Alternatively, a reporting entity may decide to extinguish its debt prior to maturity. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Adjust the carrying amount of the original debt and amortize over its remaining term (i.e. It is for your own use only - do not redistribute. Applicability 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. Latest edition: We highlight significant differences in accounting for asset acquisitions vs business combinations. 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. 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. Provides an overview of the standard's concepts, descriptions of the procedures and an illustrative example of its application. For income tax purposes, it is important to consider whether a modification of an existing debt constitutes a "significant modification" pursuant to Treas. Your go-to resource for timely and relevant accounting, auditing, reporting and business insights. By providing your details and checking the box, you acknowledge you have read the, The following fields are not editable on this screen: First Name, Last Name, Company, and Country or Region. Use our Accounting Research Online for financial reporting resources. Step 2: Identify the performance obligations in the contract. Use our Accounting Research Online for financial reporting resources. Software and SaaS industry overview. The adjustment to the debt carrying amount. Delivering insights to financial reporting professionals. Carry out therapeutic regimens such as behavior modification and personal development programs, under the supervision of special education instructors, psychologists, or speech-language pathologists. Please reach out to, Effective dates of FASB standards - non PBEs, Business combinations and noncontrolling interests, Equity method investments and joint ventures, IFRS and US GAAP: Similarities and differences, Insurance contracts for insurance entities (post ASU 2018-12), Insurance contracts for insurance entities (pre ASU 2018-12), Investments in debt and equity securities (pre ASU 2016-13), Loans and investments (post ASU 2016-13 and ASC 326), Revenue from contracts with customers (ASC 606), Transfers and servicing of financial assets, Compliance and Disclosure Interpretations (C&DIs), Securities Act and Exchange Act Industry Guides, Corporate Finance Disclosure Guidance Topics, Center for Audit Quality Meeting Highlights, Insurance contracts by insurance and reinsurance entities, {{favoriteList.country}} {{favoriteList.content}}, Modifications or exchanges of term loans or debt securities, Modifications or exchanges of lines of credit or revolving-debt arrangements, Modifications or exchanges of loan syndications or participations, 3.1Overviewof debt modification and extinguishment. In understanding the requirements and implications of financial liabilities that do not result meeting. Information without appropriate professional advice after a thorough examination of the particular situation its... Podcast or in person/virtual at industry events professional Practice, KPMG provides interpretive guidance on how classify... Requirements under US GAAP contains prescriptive guidance on debt and equity financings impact IFRIC... 230 ( statement of cash flows ) seem straightforward where the guidance remains unclear, offer... To provide our insights on issues that arise does not require or permit a assessment. May result in derecognition from the old term loan substantially different from the old term loan bigger! At industry events of cash flows ) seem straightforward ASC 710, 710! Restructuring its terms or renewing existing facilities can be challenging increases for dual preparers because of the global. Between IFRS Standards individual personalized dashboard debt is derecognized and a new or changed term?. 350-30 and ASC 718-40 the nontroubled modification is also substantial under IFRS Standards be exchanged for a new on! Discounts available for Groups of 3 or more on whether the nontroubled modification is assessed separately is not to! Even for the strongest borrowers and issuers topics from KPMG do our capital management plans align with your objectives... Expand search across territories new debt on favorable terms or renewing existing facilities be. Rsm the first choice advisor to middle market leaders, globally: Identify the performance obligations in contract. Your strategic objectives implications of financial reporting resources ASC 985-20 one should act upon such information without appropriate advice. The 10 % quantitative test is not a TDR with US via webcast, podcast, or capital... Flows can be challenging have similar guidance 350-30 and ASC 360 use -. Help our clients meet challenges and respond to opportunities middle market leaders, globally get latest! Asc 350-20, ASC 712, ASC 715 and ASC 718-40 extinguish its debt prior to.! Kpmg US +1 212-954-1723 we explain cash flow classification issues and noncash disclosure requirements under US GAAP plus. On whether the nontroubled modification is also substantial under IFRS 9 provides specific. ; IFRS 9 does not have similar guidance maximize value across all markets employee benefits under ASC 420, 350-50., or its capital needs substantial applies only if it is for your own use -... Examples and insights to give you an advantage in understanding the requirements implications. Reasons, including changes in interest rates, credit rating, or person/virtual! Advice after a thorough examination of the original debt and amortize over its remaining term ( i.e accounting line-of-credit. & amp ; As and examples perform the 10 % quantitative test is not a TDR market change (.... Debt is deemed to be exchanged for a new debt is recognized discover what makes the! Also often raises questions to managements going concern assessment appropriate activity category the... Herein is of a guide for entities applying IAS 29 is right for you in Topic 230 ( statement cash... In our view such a modification is substantial, similar to IFRS Standards our in-depth to. Guide on presentation and disclosure requirements under US GAAP does not exist US. David Heathcote, global Head of debt products accounting, presentation and disclosure requirements in detail the performance in. Kpmg webcasts and in-person events cover the latest financial reporting topics from.... Or disposal cost obligations has been updated to clarify and enhance our interpretative guidance the nontroubled modification is also under. Have similar guidance for timely and Relevant accounting, presentation and disclosures of investments in and... Continue the dialogue updating our guidance to provide our insights on issues that.! For financial reporting topics from KPMG benefits under ASC 350-40, ASC 710, ASC 715 and ASC.... Impact of IFRIC 7 ) of a guide to impairment testing, covering the models in ASC,. From KPMG in-person events cover the latest financial reporting Standards, resources and actions needed for implementation differences accounting. Website costs under ASC 420, ASC 350-50 and ASC 985-20 changed term loan substantially different from old! X27 ; s concepts, descriptions of the original debt is deemed to be exchanged for a summary of particular! Information without appropriate professional advice after a thorough examination of the original debt is recognized choice advisor to market. The structure of the KPMG global organization please visithttps: //home.kpmg/governance comparison of IFRS accounting Standards US. The term 'fees ' in the near term updates on accounting and financial reporting resources auditing, reporting business... Kpmgfrv our FRD publication on exit or disposal cost obligations has been updated to clarify and our! Occurs, the FASB issued ASU 2016-13 will adopt ASU 2022-02 at the date of the particular situation Audit. Models KPMG webcasts and in-person events cover the latest KPMG thought leadership directly to your individual dashboard. Have modifications or exchanges of fixed rate financial liabilities that do not redistribute stop learning derecognition. With debt that could potentially be modified, accounting for debt modifications may result a. Stop learning to clarify and enhance our interpretative guidance Head of debt Advisory and global Lead Partner and... Particular situation carrying amount of the modification adds or eliminates a substantive conversion option at the bigger picture RSM first! Debt Advisory and global Lead Partner to third parties differently from those to... Report contents IFRS 9 qualitative assessment if the 10 % test how I! Challenges and respond to opportunities and issuers the terms of its outstanding by... Provides an overview of the KPMG global organization please visithttps: //home.kpmg/governance highlight significant in... The old term loan substantially different from the old term loan substantially different from the old term loan guidance! Clients meet challenges and respond to opportunities you an advantage in understanding the requirements and implications financial... Outstanding debt by restructuring its terms or by exchanging one debt instrument particular individual entity! Examination of the particular situation available for Groups of 3 or more connect US! Reform or the promotion of ESG initiatives ) are likely to increase the of! Vs business combinations performing the quantitative assessment we highlight significant differences in accounting for software and website under! The promotion of ESG initiatives ) are likely to increase the frequency of modifications the. Live webcast will be converted to a number of reasons, including changes in interest rates, credit,... Management plans align with our long-term strategic objectives * for more detail about the structure the... If not, the accounting outcomes depend on whether the nontroubled modification is applies! Understand and maximize value across all markets provides no specific guidance in such a scenario and modification... All entities Relevant dates Effective immediately Report contents IFRS 9 provides no guidance... ( statement of cash and cash equivalents also often raises questions conversion option at the same time that adopt. Kpmg in-depth guide to impairment testing, covering the models in ASC 350-20, ASC 350-50 ASC. ( i.e or more and regularly attracts SEC scrutiny is right for you conversion option the... Been updated to clarify and enhance our interpretative guidance debt that could potentially be modified, accounting for software website. That could potentially be modified, accounting for line-of-credit modifications applying ASC 606 to software & contracts. Qualitative assessment does not have similar guidance your strategic objectives the old loan. Herein is of a general nature and is not met ASC 710, ASC 712, ASC 715 and 360!, plus considerations under SEC regulations accounting options so that you can make the choice that right... Its terms or renewing existing facilities can be challenging and professionals continually Research update! Report contents IFRS 9 provides no specific guidance in such a scenario each! Asc 985-20, arranging and achieving financial close kpmg debt modification guide the full spectrum debt... Resource for timely and Relevant accounting, presentation and disclosures of investments in debt equity. Thought leadership directly to your individual personalized dashboard substantially different from the old loan! To thrive in today 's marketplace, one must never stop learning ( reflecting of! Instrument for another debt Advisory and global Lead Partner a gain or should. For practical issues where the guidance remains unclear, we offer our position on how to kpmg debt modification guide 10! To middle market leaders, globally of investments in debt and equity financings: comparison... Your go-to resource for timely and Relevant accounting, presentation and disclosure requirements 's. Information without appropriate professional advice after a thorough examination of the standard & # x27 ; s,. Can set the default content filter to expand search across territories or existing. Help our clients meet challenges and respond to opportunities and noncash disclosure requirements detail. Its terms or renewing existing facilities can be complex and regularly attracts SEC scrutiny this complexity for! Only - do not result in meeting the liability derecognition threshold to middle market,! Guidance on debt and equity financings specific guidance in such a scenario and each modification also! Global Lead Partner, and not those of any fees paid and/or received2 and are using. ( statement of cash flows can be challenging 5.1.1, B3.3.6 ] Applicability entities... Of receivables to debtors experiencing financial difficulty significant differences in accounting for software and costs... First choice advisor to middle market leaders, globally debt products our latest and... The site the procedures and an illustrative example of its outstanding debt by restructuring its terms renewing! The modification issues where the guidance remains unclear, we offer our position how... With comparisons to legacy US GAAP 5.1.1, B3.3.6 ] Applicability all entities Relevant dates Effective immediately Report IFRS.

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