In a troubled debt restructuring that involves only a modification of terms, if the amount to be repaid is greater than the current carrying value of the liability
A)no gain or loss would be recognized by the debtor
B)an ordinary gain would be recognized by the debtor
C)a prior period adjustment would be recognized by the debtor
D)an ordinary loss would be recognized by the debtor

Question

Quizplus · Accepted Answer

If the amount to be repaid is greater than the current carrying value of the liability, no gain or loss would be recognized by the debtor under a troubled debt restructuring that involves only a modification of terms. This is because there is no reduction in the debtor's obligation to pay.

In a Troubled Debt Restructuring That Involves Only a Modification