Practical Accounting 1 Debt Structure

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Author:
malouduran
ID:
202755
Filename:
Practical Accounting 1 Debt Structure
Updated:
2013-02-23 10:16:32
Tags:
P1 5640
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Description:
Debt Structure
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  1. 3 Types of Debt Structure
    • 1. Asset Swap
    • 2. Equity Swap
    • 3. Modification of Terms
  2. Asset Swap
    Current Value of Liability-Current Value of Fixed Asset = Gain or Loss
  3. Equity Swap
    3. Current Value of Liability - Fair Value of Shares or Fair Value of Liability = Gain or loss
  4. Modification of Terms
    ☞reduction of interest or principal or extension of the loan

    ☞extinguishment  of old liability and establish of new liability

    ☞new liability at PV based on orig interest rate

    CV of old liability-PV of new loan

    • -Gain/Loss at least 10% of the CV of liability
    • >10% ☞no substanstial modification

    no gains or losses; no extuinguishment; finally the old liability is continous

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