Debt/Asset Ratio Equals total liabilities/total assets Measures the percentage of the capital structure provided by debt Use of debt creates financial.

Slides:

Advertisements

Similar presentations

Loan Impairments & Troubled Debts Sequence of Events.

Advertisements

Prepared by: Gabriela H. Schneider, CMA Northern Alberta Institute of Technology INTERMEDIATE ACCOUNTING Seventh Canadian Edition KIESO, WEYGANDT, WARFIELD,

Chapter 13 Debt Restructuring. Debt Restructuring Sense: correction points way to resolve the debt: bankruptcy; restructuring. Debt restructuring, occurring.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Investments 12.

Intermediate Accounting II Otto Chang Professor of Accounting

14 LONG-TERM FINANCIAL LIABILITIES

© Mcgraw-Hill Companies, 2008 Farm Management Chapter 6 The Income Statement and Its Analysis.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Bonds and Long-Term Notes 14.

Accounting for Receivables

Prepared by: Patricia Zima, CA Mohawk College of Applied Arts and Technology Chapter 14A Troubled Debt.

Irwin/McGraw-Hill 1 22 © The McGraw-Hill Companies, Inc., 1999 Corporations in Financial Difficulty Baker / Lembke / King.

1 Troubled Debt Restructuring n When the borrower is in severe financial difficulty, the creditor(s) may change the terms of debt agreement (i.e.,reduce.

Loan Impairment in Acct 414 Remember that we are only covering the CREDITOR side of these transactions. With a modification of terms, the creditor always.

© 2004 The McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Chapter 14 Bonds and Long-Term Notes.

McGraw-Hill/Irwin 14-1 © The McGraw-Hill Companies, Inc., 2005 Long-Term Liabilities Chapter 14.

Long-Term Liabilities - Chapter 10 Financial & Managerial Accounting, 8th Edition by Needles, Powers, Crosson.

Chapter 14: Long Term Liabilities. Long-term debt consists of probable future sacrifices. It has various covenants or restrictions for the protection.

ACCOUNTING FOR TROUBLED DEBT

©2008 Pearson Prentice Hall. All rights reserved. 5-1 Short-Term Investments & Receivables Chapter 5.

©2006 Prentice Hall Business Publishing Financial Accounting, 6/e Harrison/Horngren 1 Receivables and Short- Term Investments Chapter 5.

PowerPoint® Slides to accompany Basic Bookkeeping, Seventh Edition Prepared by JD Chazan CPA, CA National Taiwan University 15-1 Copyright © 2015 by Nelson.

McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Seven Accounting for Receivables.

Preparing a business performance summary:. What you’ll learn  How to determine what the profit is for a business for a year.  Considerations that one.

MANAGEMENT DECISIONS AND FINANCIAL ACCOUNTING REPORTS Baginski & Hassell.

BSAD 221 Introductory Financial Accounting Donna Gunn, CA.

ALTERNATIVES AND IMPLICATIONS. Debt settled through the use of an asset – Debtor must have an asset available for payment of the loan – Debtor may need.

The closing of the General Ledger

MANAGEMENT DECISIONS AND FINANCIAL ACCOUNTING REPORTS Baginski & Hassell.

Chapter 10 Accounting for Debt Transactions LOANS & BONDS.

ACC 424 Financial Reporting II Lecture 9 Inter-company transactions - 2.

© 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater Corporations and Bonds Payable Chapter 20.

Reporting and Interpreting Bonds Chapter 10 McGraw-Hill/Irwin © 2009 The McGraw-Hill Companies, Inc.

PRINCIPLES OF FINANCIAL ACCOUNTING

WRITTEN BY RUBY ANN SAWYER, BRANTLEY COUNTY MIDDLE SCHOOL Introduction to Accounting.

What financial statement uses net income (or net loss) taken directly from the income statement?

1 Long-term Liabilities ACCTG 5120 David Plumlee.

Debt Restructuring, Corporate Reorganizations, and Liquidations Chapter 21.

Accounting for Accruals – Advanced Topics: Receivables and Payables

Chapter 10 Long-Term Liabilities Using Financial Accounting Information: The Alternative to Debits and Credits, 6/e by Gary A. Porter and Curtis L. Norton.

© The McGraw-Hill Companies, Inc., 2008 McGraw-Hill/Irwin Chapter 7 Reporting and Analyzing Receivables.

© The McGraw-Hill Companies, Inc., 2008 McGraw-Hill/Irwin Accounting for Receivables and Payables Chapter Eight.

Needles Powers Principles of Financial Accounting 12e Receivables 9 C H A P T E R ©human/iStockphoto.

© The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin Accounting for Receivables Chapter 9 9.

Module 7 Reporting and Analyzing Nonowner Financing Activities.

Prepared by Gabriela H. Schneider, CMA; Grant MacEwan College INTERMEDIATE ACCOUNTING INTERMEDIATE ACCOUNTING Sixth Canadian Edition KIESO, WEYGANDT, WARFIELD,

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 21-1 Accrued Revenue.

© The McGraw-Hill Companies, Inc., 2008 McGraw-Hill/Irwin Accounting for Long- Term Debt Chapter Ten.

Advanced Financial Accounting FIN-611 Mian Ahmad Farhan Lecture-3 Single Entry (Conversion Method)

Financial Statements. Balance Sheet Income Statement Ratios Outline.

ADJUSTMENTS: BAD DEBTS

Accounting for Receivables

Long-term Liabilities

Invest Investments – Debt and equity (long-term, short-term)

Chapter 13: Investments Fundamentals of Intermediate Accounting

Lecture 1 Debtors OR Trade Debtors – are the receivables by the organization against the sale of goods. Receivables / Other Receivables – are all receivables.

Troubled Debt Restructuring

MANAGEMENT DECISIONS AND FINANCIAL ACCOUNTING REPORTS

Notes Receivable Supported by a formal promissory note.

Debit Credit Review Questions

Chapter 14: Long Term Liabilities

Bonds Payable and Investments in Bonds

Reporting and Interpreting Bonds

Bonds and Long-Term Notes

Point 6 Financial Statements

Extending Financial Statement Information on a Work Sheet

Reporting and Interpreting Bonds

LESSON 8-2 Recording Closing Entries

ACCOUNTING FOR RECEIVABLES

IFRS 9 – Financial Instruments

Presentation transcript:

Debt/Asset Ratio Equals total liabilities/total assets Measures the percentage of the capital structure provided by debt Use of debt creates financial leverage and increases risk

Times Interest Earned Net income + interest+taxes Interest Measures how protected creditors are with regard to interest payments, and is often a covenant in loan agreeements.

Accounting for Troubled Debt First recognize a loss on impairment Subsequently there may be restructurings which can results in settlements or revisions of terms

Impairments Loan is impaired when it is probable the creditor will not collect all the amounts due Loss on impairment is the difference between the carrying value of the loan (plus accrued interest) and the expected future cash flow from the loan discounted at the loans historical interest rate Creditor debits bad debt expense and credits allowance; debtor has no entry

Settlement of Debt at Less than Carrying Value Creditor will recognize loss (usually against the allowance) for the difference between the fair value of property received and the carrying value of the loan. Debtor will recognize gain/loss on property transferred and gain or restructuring of debt

Modification of Terms Creditor grants a lower interest rate or forgives part of loan, extends maturity date, or forgives accrued interest Creditor will reduce the carrying value of the loan to the present value of its future cash flows, using the historical interest rate. Recognize a loss for the difference between the old and new carrying values Record interest revenue subsequently using the new carrying value, with amortization going to the allowance account.

Debtor Accounting If total future outflows for the debtor are greater than the carrying value of the loan, no gain is recognized Need to figure the effective interest rate on the new cash flows, and amortize the loan at that rate

Debtor Accounting - Gain If the total future cash flows for the debtor are less than the carrying amount of the debt, a gain for the difference is recognized and the debt is written down. No subsequent interest expense will be recognized