Regarding accounting for troubled debt,which of the following statements is true?
A) The treatment for troubled debt is the same under both U.S.GAAP and IFRS.
B) The settlement of troubled debt results in an economic loss to the debtor because the creditor accepts more than the book value of the debt to settle the debt.
C) U.S.GAAP uses a "10 percent rule" to determine whether a gain is recognized by the debtor in a troubled debt situation.
D) Because IFRS uses the present value approach to determine the magnitude of the settlement for troubled debt, the magnitude of the new book value of the restructured debt will be lower and the gain recognition will be larger under IFRS.
Correct Answer:
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