A troubled debt restructuring occurs when a creditor, for economic or legal reasons related to the debtor's financial difficulties, grants a concession to the debtor that it would not otherwise consider.

Question

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A troubled debt restructuring is defined in accounting terms as a situation where a creditor agrees to a change in the terms of a debt agreement due to a debtor's financial difficulties. This change in terms is considered a concession, and it is not something that the creditor would normally grant under normal circumstances. Therefore, the statement is true.

A Troubled Debt Restructuring Occurs When a Creditor, for Economic