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Statement No. 76 Extinguishment of Debt-an amendment of APB Opinion No. 26 STATUS Issue Date: November 1983 Effective Date: For transactions entered into after December 31, 1983 Affects: Supersedes APB 26, paragraphs 2 and 3(a) Amends APB 26, paragraphs 3(c), 19, and 21 Amends FAS 22, footnote 1 Amends FAS 32, Appendix A, SOP 78-5 Affected by: Paragraph 7 amended by FAS 111 Superseded by FAS 125 Other Interpretive Pronouncement: FTB 84-4 (superseded by FAS 125) Note: Although superseded, this pronouncement is still applicable until the effective date of FAS 125. Issues Discussed by FASB Emerging Issues Task Force (EITF) Affects: No EITF Issues Interpreted by: Paragraph 3(c) interpreted by EITF Issue No. 86-36 Related Issues: EITF Issues No. 85-34, 86-18, 87-20, and 95-15 Abbreviations for Accounting Pronouncements FAS - FASB Statements FIN - FASB Interpretations FTB - FASB Technical Bulletins APB - APB Opinions AIN - AICPA Interpretations ARB - Accounting Research Bulletins CON - FASB Concepts EITF - EITF Issues Q&A - FASB Implementation Guides SUMMARY This Statement provides guidance to debtors as to when debt should be considered to be extinguished for financial reporting purposes. This project was undertaken in response to requests to clarify the circumstances that constitute extinguishment and because the Board learned of growing diversity in practice. This Statement specifies that debt is to be considered extinguished if the debtor is relieved of primary liability for the debt by the creditor and it is probable that the debtor will not be required to make future payments as guarantor of the debt. This Statement also specifies that, even though the creditor does not relieve the debtor of its primary obligation, debt is to be considered extinguished if (a) the debtor irrevocably places cash or other essentially risk-free monetary assets in a trust solely for satisfying that debt and (b) the possibility that the debtor will be required to make further payments is remote. This Statement amends APB Opinion No. 26, Early Extinguishment of Debt, to make it apply to all extinguishments of debt, whether early or not, other than those currently exempted from its scope, such as debt conversions and troubled debt restructurings. This Statement is applicable to transactions occurring after December 31, 1983, with earlier application encouraged in annual financial statements that have not been previously issued. This Statement also permits the restatement of previously issued financial statements to apply this Statement retroactively. Copyright by Financial Accounting Standards Board. All Rights Reserved. Used by Permission.
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