Current GAAP has eliminated the opportunity for a company to attempt to generate income statement gains and the resulting favorable financial ratio effects associated with many debt-for-debt and debt-for-equity swaps.

Question

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Current GAAP (Generally Accepted Accounting Principles) still allows for debt restructuring, including debt-for-debt and debt-for-equity swaps, which can impact a company's income statement and financial ratios. However, the accounting for these transactions is subject to specific rules that aim to reflect the economic substance of the transactions rather than merely allowing companies to engineer favorable financial outcomes.

Current GAAP Has Eliminated the Opportunity for a Company to Attempt