Now that the credit markets are loosening up, many companies are considering whether to restructure their existing debt or credit facilities. While reasons for restructuring vary, the accounting analysis remains the same. When debt or credit facilities are modified or debt is exchanged, companies should first consider whether the modification represents a troubled debt restructuring -- a step that is often overlooked. If the criteria for a troubled debt restructuring are met, then the borrower may recognize a gain or loss on extinguishment. If the modification is not accounted for as a troubled debt restructuring, then it would be evaluated under other accounting guidance for debt modifications or extinguishments to determine whether a gain or loss should be recognized.

Read more: Atlanta Business Chronicle