Chapter 1 — Overview

This Roadmap discusses an entity’s accounting, presentation, and disclosure of (1) debt obligations, such as bonds, loans, notes, and other payables, including convertible debt, and (2) commitments to obtain debt financing in the future, such as delayed-draw loan commitments, lines of credit, and revolving-debt arrangements. Appendix A identifies the authoritative guidance discussed in the Roadmap.

An entity that issues debt should determine how to appropriately identify units of account (see Section 3.3) and, if necessary, allocate the initial proceeds and transaction costs among those units of account (see Sections 3.4 and 3.5). The initial measurement of debt depends on whether it was issued for cash or property, goods, or services and whether the entity elects to account for the debt at fair value (see Chapter 4). The entity should also determine how to account for any fees and costs associated with debt arrangements, including commitments to obtain debt financing (see Chapter 5).

Debt is accounted for at amortized cost, and the interest method is applied (see Section 6.2), unless the issuer has elected to account for the debt at fair value (see Section 6.3). Specialized accounting models apply to certain types of debt (such as sales of future revenue, participating mortgages, indexed debt, extendable increasing-rate debt, joint-and-several obligations, and convertible debt) (see Chapter 7), and an entity needs to analyze whether debt contains any features that must be accounted for separately as derivatives (see Chapter 8).

When an entity settles, modifies, or exchanges debt, it should consider the accounting requirements related to extinguishments (see Chapter 9), modifications and exchanges (see Chapter 10), troubled debt restructurings (TDRs) (see Chapter 11), and conversions (see Chapter 12).

Most entities classify and present debt as either current or noncurrent on the face of the balance sheet (see Chapter 13). Chapter 14 discusses other considerations related to the accounting, presentation, and disclosure of debt and structured trade payable arrangements.

Some entities are affected by both U.S. GAAP and IFRS® Accounting Standards. There are significant differences between the guidance on debt under U.S. GAAP and the equivalent requirements under IFRS Accounting Standards (see Chapter 15).