- US GAAP
ASC 470 comprises six Subtopics, below is an overview of each Subtopic.
ASC 470-10 notes the following:
The Overall Subtopic addresses classification determination for specific obligations, such as the following:
- Short-term obligations expected to be refinanced on a long-term basis
- Due-on-demand loan arrangements
- Callable debt
- Sales of future revenue
- Increasing rate debt
- Debt that includes covenants
- Revolving credit agreements subject to lock-box arrangements and subjective acceleration clauses
- Indexed debt.
ASC 470-20 notes the following:
This Subtopic provides accounting and reporting guidance for debt (and certain preferred stock) with specific conversion features and other options as follows:
- Debt instruments with detachable warrants
- Convertible securities—general
- Beneficial conversion features
- Interest forfeiture
- Induced conversions
- Conversion upon issuer’s exercise of call option
- Convertible instruments issued to nonemployees for goods and services
- Own-share lending arrangements issued in contemplation of convertible debt issuance.
ASC 470-30 notes the following:
This Subtopic establishes the borrower’s accounting for a participating mortgage loan if the lender is entitled to participate in any of the following:
- Appreciation in the fair value of the mortgaged real estate project
- The results of operations of the mortgaged real estate project.
ASC 470-40 notes the following:
This Subtopic establishes guidance for determining whether an arrangement involving the sale of inventory is in substance a financing arrangement.
Product financing arrangements include agreements in which a sponsor (the entity seeking to finance product pending its future use or resale) does any of the following:
- Sells the product to another entity (the entity through which the financing flows), and in a related transaction agrees to repurchase the product (or a substantially identical product)
- Arranges for another entity to purchase the product on the sponsor’s behalf and, in a related transaction, agrees to purchase the product from the other entity
- Controls the disposition of the product that has been purchased by another entity in accordance with the arrangements described in either (a) or (b).
ASC 470-50 notes the following:
This Subtopic discusses the accounting for all extinguishments of debt instruments, except debt that is extinguished through a troubled debt restructuring (see Subtopic 470-60) or a conversion of debt to equity securities of the debtor pursuant to conversion privileges provided in terms of the debt at issuance (see Subtopic 470-20).
This Subtopic also provides guidance on whether an exchange of debt instruments with the same creditor constitutes an extinguishment and whether a modification of a debt instrument should be accounted for in the same manner as an extinguishment.
In circumstances where an exchange of debt instruments or a modification of a debt instrument does not result in extinguishment accounting, this Subtopic provides guidance on the appropriate accounting treatment.
ASC 470-60 notes the following:
This Subtopic addresses measurement, derecognition, disclosure, and implementation guidance issues concerning troubled debt restructurings focused on the debtor’s records. The creditor’s accounting is discussed in Subtopic 310-40.