If the price paid by an affiliate to acquire the debt of another is less than the book value of the debt,a constructive loss on retirement of debt occurs.

Question

Quizplus · Accepted Answer

A constructive loss on retirement of debt occurs when the reacquisition price is greater than the net carrying amount of the debt, not less. If the acquisition price is less, it results in a gain, not a loss.

If the Price Paid by an Affiliate to Acquire the Debt