In a troubled debt restructuring in which the debt is restructured by a transfer of assets with a fair value less than the carrying amount of the debt, the debtor would recognize
A) no gain or loss on the restructuring.
B) a gain on the restructuring.
C) a loss on the restructuring.
D) None of these answers are correct.

Question

Quizplus · Accepted Answer

In a troubled debt restructuring where the debtor restructures the debt by transferring assets with a fair value less than the carrying amount of the debt, the debtor recognizes a gain on the restructuring. This gain arises because the obligation is settled for less than its recorded amount.

In a Troubled Debt Restructuring in Which the Debt Is