Chapter 10 — Debt Modifications and Exchanges

10.6 Modifications and Exchanges of Credit Facilities

10.6.1 Background

As discussed in Chapter 5, an entity might incur costs and fees to obtain a commitment from a prospective creditor to obtain funds on specified terms and conditions in the future. Such commitments fall into two broad categories: (1) lines of credit and other revolving-debt commitments that permit the entity to borrow, repay amounts borrowed, and reborrow amounts previously repaid, and (2) delayed-draw term loan commitments and other nonrevolving commitments that do not permit the entity to reborrow amounts repaid (see Section 2.3.3). This section discusses the accounting for modifications and exchanges of the following types of arrangements:

Line-of-credit and other revolving-debt arrangements (see the next section).
Delayed-draw term loan commitments (see Section 10.6.3).
Credit facilities that include both drawn and undrawn components (see Section 10.6.4).

10.6.2 Modifications of Line-of-Credit and Other Revolving-Debt Arrangements

10.6.2.1 General

When an entity modifies or exchanges a line-of-credit or revolving-debt arrangement with the same creditor, it should evaluate how to account for any unamortized deferred costs associated with the existing arrangement (see Section 5.4) as well as any fees paid to the creditor and any costs paid to third parties in connection with the modification or exchange. ASC 470-50-40-21 requires an entity to perform a borrowing-capacity analysis to determine the appropriate accounting for such modifications or exchanges (see Section 10.6.2.3).

10.6.2.2 Scope

ASC 470-50

40-22 The guidance in this Subtopic is limited to modifications to or exchanges of line-of-credit or revolving-debt arrangements by a debtor and a creditor (the same parties that were involved in the original line-of-credit or revolving-debt arrangement) in a nontroubled situation.

The guidance in ASC 470-50-40-21 through 40-23 applies when a debtor modifies or exchanges a line-of-credit or revolving-debt arrangement with the same creditor or group of creditors. If an entity terminates an existing line-of-credit or revolving-debt arrangement and contemporaneously obtains a new line-of-credit or revolving-debt arrangement from the same creditor or group of creditors, for example, those transactions should be analyzed as an exchange of the existing line-of-credit or revolving-debt arrangement under ASC 470-50-40-21 through 40-23.

ASC 470-50-40-21 through 40-23 apply irrespective of whether a line-of-credit or revolving-debt arrangement is replaced by a new line-of-credit or revolving-debt arrangement or term debt. For example, if a debtor converts a revolving-debt arrangement into a term-debt arrangement, it should perform the borrowing-capacity test in ASC 470-50-40-21 to determine the appropriate accounting for any deferred costs as well as any fees or costs associated with the modification or exchange.

If, because of an entity’s violation of a covenant in a line-of-credit or revolving-debt arrangement, outstanding amounts become repayable on demand, the creditor might agree to waive the covenant violation in exchange for a fee. Such a fee payment would be analyzed as a modification of the line-of-credit or revolving-debt arrangement even if no other terms in the arrangement are modified (see Section 10.2.4 for analogous guidance).

It would generally be acceptable to apply ASC 470-50-40-21 to all of the elements of a modification or exchange of a line-of-credit arrangement when the same group of individual creditors participates in both the original arrangement and the new arrangement (i.e., there are no new creditors or departing creditors in the overall arrangement). That is, if only a portion of the total maximum credit availability among individual creditors within the same creditor group has shifted, that alone would not result in a requirement for an entity to write off any portion of the unamortized deferred costs related to the original arrangement.

The guidance in ASC 470-50-40-21 through 40-23 does not apply if (1) the modification represents a TDR (see Chapter 11) or (2) the debtor replaces the arrangement with a new arrangement with a different creditor. If a debtor terminates an existing line-of-credit or revolving-debt arrangement and obtains a new line-of-credit or revolving-debt arrangement from a different creditor, the debtor should write off all the unamortized deferred costs of the old arrangement as well any costs incurred to terminate the arrangement with the original creditor.

10.6.2.3 Borrowing-Capacity Analysis

ASC 470-50

40-21 Modifications to or exchanges of line-of-credit or revolving-debt arrangements resulting in either a new line-of-credit or revolving-debt arrangement or resulting in a traditional term-debt arrangement shall be evaluated in the following manner:

The debtor shall compare the product of the remaining term and the maximum available credit of the old arrangement (this product is referred to as the borrowing capacity) with the borrowing capacity of the new arrangement.
If the borrowing capacity of the new arrangement is greater than or equal to the borrowing capacity of the old arrangement, then any unamortized deferred costs, any fees paid to the creditor, and any third-party costs incurred shall be associated with the new arrangement (that is, deferred and amortized over the term of the new arrangement).
If the borrowing capacity of the new arrangement is less than the borrowing capacity of the old arrangement, then:
1. Any fees paid to the creditor and any third-party costs incurred shall be associated with the new arrangement (that is, deferred and amortized over the term of the new arrangement).
2. Any unamortized deferred costs relating to the old arrangement at the time of the change shall be written off in proportion to the decrease in borrowing capacity of the old arrangement. The remaining unamortized deferred costs relating to the old arrangement shall be deferred and amortized over the term of the new arrangement.

Fees between the debtor and the creditor include an increase or a decrease in the fair value of a freestanding equity-classified written call option held by a creditor (calculated in accordance with paragraph 815-40-35-16) that is modified or exchanged as a part of or is directly related to a modification or an exchange of a line-of-credit or revolving-debt arrangement held by that same creditor (see paragraphs 815-40-35-14 through 35-15 and 815-40-35-17(c)). Third-party costs include an increase (but not a decrease) in the fair value of a freestanding equity-classified written call option held by a third party (calculated in accordance with paragraph 815-40-35-16) that is modified or exchanged as a part of or is directly related to a modification or an exchange of a line-of-credit or revolving-debt arrangement (see paragraphs 815-40-35-14 through 35-15 and 815-40-35-17(c)).

For fees between the debtor and the creditor or third-party costs not related to exchanges of or modifications to a line-of-credit or revolving-debt arrangements resulting in either a new line-of-credit or revolving-debt arrangement, see paragraphs 470-50-40-17 through 40-18A.

40-23 See Example 1 (paragraph 470-50-55-10) for an illustration of this guidance.

The accounting for a modification or exchange of a line-of-credit or revolving-debt arrangement with the same creditor depends on whether the debtor’s borrowing capacity has decreased. ASC 470-50-40-21 through 40-23 require the debtor to calculate the borrowing capacity by multiplying the arrangement’s (1) remaining term and (2) maximum available credit (i.e., the full committed amount including any amounts drawn). This calculation does not depend on the measure of time used for the remaining term (e.g., whether the remaining term is measured in months, quarters, or years) except that the debtor must apply a consistent measure when calculating the borrowing capacity of both the original and the new arrangement.

Example 10-13

Calculation of Borrowing Capacity

A revolving-debt arrangement has a remaining term of five years. The outstanding amount currently drawn is $10 million, and the remaining undrawn amount is $15 million. Under ASC 470-50, the borrowing capacity of this arrangement is $125 million, or 5 × ($10 million + $15 million).

The guidance requires any unamortized deferred costs of the old arrangement, and any costs and fees incurred in connection with a modification or exchange, to be deferred and amortized over the term of the new arrangement except if the borrowing capacity under the new arrangement is less than that under the old arrangement. In that case, unamortized deferred costs of the old arrangement are written off in proportion to the decrease in the borrowing capacity.

Borrowing Capacity Under the New Arrangement	Accounting for Unamortized Deferred Costs of the Old Arrangement	Accounting for Costs and Fees Paid in Connection With the Modification or Exchange
Equals or exceeds the borrowing capacity under the old arrangement	Deferred and amortized over the term of the new arrangement	Deferred and amortized over the term of the new arrangement
Is less than the borrowing capacity under old arrangement	Written off in proportion to the decrease in the borrowing capacity. The remaining amount is deferred and amortized over the term of the new arrangement	Deferred and amortized over the term of the new arrangement

10.6.2.4 Illustrations

ASC 470-50

Example 1: Accounting for Changes in Line-of-Credit or Revolving-Debt Arrangements

55-10 This Example illustrates the application of the guidance in paragraphs 470-50-40-21 through 40-22 for changes in line-of-credit or revolving-debt arrangements.

55-11 Terms of original arrangement are as follows:

Five-year term (three years remaining)
$10 million commitment amount
The borrowing capacity under the original arrangement at the time of the change is $30 million, the product of the remaining term (3 years) and the commitment amount ($10 million).

55-12 The following situations represent changes that are made (with the same creditor) to the original terms:

The commitment amount is increased to $15 million, the term of the new arrangement remains at 3 years (borrowing capacity is $45 million).
The commitment amount is decreased to $2 million, the term of the new arrangement is 5.5 years (borrowing capacity is $11 million).
The original revolver is replaced with a 3-year, $7.5 million term loan, with principal due at the end of 3 years (borrowing capacity is $22.5 million).
The original revolver is replaced with a 3-year, $10 million term loan, with principal due at the end of 3 years (borrowing capacity is $30 million).

55-13 In all of the situations described, at the time the change is made to the original arrangement, $150,000 of unamortized costs relating to the original arrangement remain on the debtor’s balance sheet; the debtor pays a fee of $100,000 to the creditor; and the debtor incurs third-party costs of $200,000.

The following illustrates the various situations described in this Example.

Case	Old Borrowing Capacity	New Borrowing Capacity	Accounting Treatment of Unamortized Deferred Costs	Accounting Treatment of Fees and Third-Party Costs Incurred
A	30 million	45 million	$150,000 is amortized over 3 years.	$300,000 is deferred and amortized over 3 years.
B	30 million	11 million	63 percent of the unamortized costs ($94,500) are written off; the remaining costs ($55,500) are amortized over 5.5 years.	$300,000 is deferred and amortized over 5.5 years.
C	30 million	22.5 million	25 percent of the unamortized costs ($37,500) are written off; the remaining costs ($112,500) are amortized over 3 years.	$300,00 is deferred and amortized over 3 years.
D	30 million	30 million	$150,000 is amortized over 3 years.	$300,000 is deferred and amortized over 3 years.

Example 10-14

Issuance of Warrants as Consideration for Extension of Line of Credit

Entity C obtains an extension of the remaining term of an existing line of credit in exchange for equity-classified warrants on C’s common stock. No other terms in the arrangement are modified. The fair value of the warrants should be analyzed as the payment of a fee to the creditor (i.e., a debit to “deferred financing costs” and a credit to “equity”). Because the term was extended and the maximum available credit remained the same, the borrowing capacity has increased. Therefore, the fair value of the warrants should be deferred and amortized over the term of the modified arrangement.

Example 10-15

Treatment of Waiver Fee and Third-Party Costs

As a result of Entity B’s violation of a covenant on a line-of-credit arrangement, outstanding amounts have become repayable on demand. The creditor agrees to waive the covenant violation in exchange for a fee. Further, B incurs legal fees in connection with the waiver. No other terms in the arrangement are modified and the borrowing capacity remains unchanged. Nevertheless, the payment of the waiver fee represents a modification of the original arrangement under ASC 470-50-40-21 through 40-23. Therefore, the waiver fee and the third-party legal costs should be deferred and amortized over the term of the new arrangement, which is equal to the remaining term of the original arrangement.

Example 10-16

Modification That Involves a Reduction of the Borrowing Capacity of a Line of Credit

Entity D and Bank B agree to amend the terms of D’s revolving-debt arrangement to (1) reduce the total amount available from $250 million to $200 million, (2) extend the remaining term from two and a half years to three years, (3) increase the interest rate, and (4) modify certain covenants. In exchange for the amendment, B charges a fee of $3 million. At the time of the amendment, D had an asset of $5 million attributable to remaining unamortized deferred financing costs related to the original arrangement.

ASC 470-50-40-21(a) requires the borrowing capacity of a revolving-debt arrangement to be calculated as the product of the maximum borrowing capacity and remaining term under the arrangement. Accordingly, D determines that the borrowing capacity under the old arrangement is $625 million ($250 million × 2½ years) and the borrowing capacity after the amendment is $600 million ($200 million × 3 years):

Because the borrowing capacity of the new arrangement ($600 million) is less than the borrowing capacity of the old arrangement ($625 million), D is required under ASC 470-50-40-21(c) to write off the existing unamortized deferred costs in proportion to the decrease in the borrowing capacity. The proportion written off is 4 percent, or ($625 million – $600 million) ÷ $625 million = 4%. Accordingly, $200,000 is immediately expensed through earnings (4% × $5 million = $200,000). The remaining unamortized deferred costs of $4.8 million and the modification fee of $3 million are deferred as an asset and amortized on a straight-line basis (see Section 5.4) over the 36 months to the revised maturity date of the arrangement.

Example 10-17

Modification That Involves a Reduction of the Borrowing Capacity of a Line of Credit and Conversion of Outstanding Amount to a Term Loan

A revolving-debt arrangement has a remaining term of five years and remaining unamortized deferred costs of $10 million. The outstanding amount currently drawn is $100 million and the remaining amount available to be drawn is $150 million. Under ASC 470-50-40-21(a), the borrowing capacity of this arrangement equals $1,250 million, or 5 × ($100 million + $150 million).

The revolving-debt arrangement is modified to reduce the remaining term to three years and the amount available to be drawn to $100 million. Further, the outstanding amount currently drawn as of the modification date ($100 million) is converted into a traditional term-debt arrangement with a maturity of five years. The debtor pays creditor fees of $2 million and incurs third-party costs of $1 million in connection with the modification.

Under ASC 470-50-40-21(a) and 40-22, the borrowing capacity of the modified arrangement is calculated to reflect the borrowing capacity of both the modified revolving-debt arrangement and the new term-debt arrangement. Therefore, the borrowing capacity of the new arrangement equals $800 million, or (3 × $100 million) + (5 × $100 million).

Because the borrowing capacity of the new arrangement ($800 million) is less than the borrowing capacity of the old arrangement ($1,250 million), the existing unamortized deferred costs must be written off under ASC 470-50-40-21(c) in proportion to the decrease in the borrowing capacity. The proportion written off is 36 percent, or ($1,250 million – $800 million) ÷ $1,250 million = 36%. Accordingly, $3.6 million is immediately expensed through earnings (36% × $10 million = $3.6 million). The remaining unamortized deferred costs of $6.4 million and the costs and fees incurred in connection with the modification of $3 million are deferred.

Because some of the revolving-debt arrangement was replaced with a traditional term-debt arrangement, a portion of the total amount of deferred costs of $9.4 million should be allocated to the traditional term-debt arrangement (e.g., on a relative-borrowing-capacity basis) and treated as an issuance cost of the term debt in a manner similar to a debt discount. The portion of the deferred costs allocated to the revolving-debt arrangement is deferred as an asset and amortized as an expense over the remaining term of the revolving-debt arrangement.

Example 10-18

Modification of Line of Credit That Involves Multiple Creditors

Entity X had a revolving line-of-credit arrangement with a remaining two-year term that contained a total maximum available credit of $50 million (the “original arrangement”). The total maximum credit was provided through the following legally binding lending commitments with three separate creditors:

Bank A — total lending commitment of $20 million.
Bank B — total lending commitment of $20 million.
Bank C — total lending commitment of $10 million.

Entity X replaces the original arrangement with a revolving line-of-credit arrangement with a five-year term that contains a total maximum available credit of $75 million (the “new arrangement”). The total maximum credit is provided through the following legally binding lending commitments with three separate creditors:

Bank A — total lending commitment of $25 million.
Bank B — total lending commitment of $25 million.
Bank D — total lending commitment of $25 million.

When X replaced the original arrangement, it had recognized unamortized deferred fees of $400,000 associated with the original arrangement ($160,000 to A, $160,000 to B, and $80,000 to C) and unamortized deferred third-party costs of $40,000. In conjunction with the issuance of the new arrangement, X paid fees of $1.5 million to the creditors ($500,000 to each bank) and incurred third-party costs of $100,000.

In accordance with ASC 470-50-40-22, X should apply ASC 470-50-40-21 to the unamortized deferred fees and costs associated with the original arrangement related to the parties involved in the original arrangement (A and B). Entity X should not apply ASC 470-50-40-21 to the unamortized deferred fees and costs associated with the original arrangement related to C because C is not a creditor in the new arrangement. In addition, X should not apply ASC 470-50-40-21 to the fees and third-party costs associated with the new arrangement related to D because D was not a creditor in the original arrangement.

The table below summarizes the appropriate accounting for the fees and costs as a result of the exchange.

Creditor	Fees and Costs Associated With the Original Arrangement	Fees and Costs Associated With the New Arrangement
Bank A	The borrowing capacity with Bank A increased; therefore, under ASC 470-50-40-21, the unamortized deferred fees of $160,000 associated with the original arrangement are deferred and amortized over the term of the new arrangement.	Under ASC 470-50-40-21, the $500,000 that X paid to A is associated with the new arrangement and is deferred and amortized over the term of the new arrangement.
Bank B	The borrowing capacity with Bank B increased; therefore, under ASC 470-50-40-21, the unamortized deferred fees of $160,000 associated with the original arrangement are deferred and amortized over the term of the new arrangement.	Under ASC 470-50-40-21, the $500,000 that X paid to B is associated with the new arrangement and is deferred and amortized over the term of the new arrangement.
Bank C	ASC 470-50-40-21 does not apply since C is not a creditor in the new arrangement. Rather, the termination of the lending arrangement with C is considered an extinguishment that results in the write-off of the $80,000 of unamortized deferred fees associated with the original arrangement.	N/A
Bank D	N/A	ASC 470-50-40-21 does not apply since D was not a creditor in the original arrangement. Nevertheless, in accordance with ASC 835, the $500,000 that X paid to D should be deferred and amortized over the term of the new arrangement.
Third-party costs	The unamortized costs associated with the original arrangement should be written off in proportion to the unamortized deferred fees associated with the original arrangement that were written off (20%, or $80,000 of the $400,000 that was written off). This results in a write-off of $8,000 of the unamortized deferred third-party costs associated with the original arrangement.	Under ASC 470-50-40-21 and ASC 835, the $100,000 of third-party costs incurred on the new arrangement are associated with the new arrangement and are deferred and amortized over the term of the new arrangement.

In addition, note that it would generally be acceptable to apply ASC 470-50-40-21 to all the elements of a modification or exchange of a line-of-credit arrangement when the same group of individual creditors participates in both the original arrangement and the new arrangement (i.e., there are no new creditors or departing creditors in the overall arrangement). That is, the mere shift of a portion of the total maximum credit availability among individual creditors within the same creditor group would not itself require an entity to write off any portion of the unamortized deferred costs related to the original arrangement (see Section 10.6.2.2). If, in the example above, A, B, and C were the creditors of the new arrangement and individually provided a credit availability of $55 million, $10 million, and $10 million, respectively, because the borrowing capacity of the new arrangement in total would be greater than that of the original arrangement in total, X would not be required to write off any of the unamortized deferred fees and costs related to the original arrangement notwithstanding the fact that $10 million of B’s original credit commitment has been replaced by an additional credit commitment of A.

In certain line-of-credit arrangements, the contractual lending arrangement is between a debtor and a lead bank. Under the definition of “loan participation” in ASC 470-50-20 (see Section 10.3.2.4), participating banks are not direct creditors; rather, they have an interest represented by a certificate of participation from the lead bank. In these situations, the lead bank is considered the sole creditor. Thus, in a modification or exchange of a line-of-credit arrangement between a debtor and the lead bank, the debtor would apply ASC 470-50-40-21 to the entire modification or exchange. Accordingly, if A were the lead bank in both the original arrangement and new arrangement, because the borrowing capacity of the new arrangement would be greater than that of the original arrangement, the entire amount of unamortized deferred fees and costs associated with the original arrangement and all of the fees and costs incurred to enter the new arrangement would be deferred and amortized over the term of the new arrangement. The change in the composition of the participating banks (i.e., B, C, and D) would therefore have no effect on the accounting.

10.6.3 Modifications of Delayed-Draw Term Loan Commitments

As discussed in Section 5.3, an entity might defer costs associated with a delayed-draw term loan commitment as an asset before the issuance of the debt. ASC 470-50 does not specifically address how the holder of a delayed-draw term loan commitment should account for a modification or exchange of such a commitment if no amount has been drawn. It is acceptable to apply the guidance in ASC 470-50-40-21 through 40-23 (see Section 10.6.2) on modifications to line-of-credit or revolving-debt arrangements to such modifications. For amounts that have been drawn under a delayed-draw term loan commitment, an entity should apply the guidance on debt modifications and exchanges in ASC 470-50-40-6 through 40-12 (see Sections 10.2 through 10.5).

10.6.4 Modifications to Credit Facilities That Include Both Drawn and Undrawn Components

Credit facilities often include a combination of term loans, delayed-draw term loan commitments, and line-of-credit or revolving-debt arrangements. While ASC 470-50 addresses the evaluation of modifications and exchanges of term debt (see Sections 10.2 through 10.5) and modifications of line-of-credit and revolving-debt arrangements (see Section 10.6.2), it does not specifically address amendments to credit facilities that include a combination of types except for modifications of revolving-debt arrangements that are modified into, or exchanged for, term loans (see Section 10.6.2.2).

If an outstanding term loan is modified or exchanged so that it becomes an amount drawn under a line-of-credit or revolving-debt arrangement with the same creditor, the debtor should apply the guidance on modifications and exchanges of term-debt arrangements (such as the guidance in ASC 470-50-40-10 on the 10 percent cash flow test) to the associated debt (see Sections 10.2 through 10.5). In evaluating whether to account for the original term loan as extinguished, the debtor would treat the amount drawn after the amendment as a term loan with payment terms that are consistent with those of amounts drawn under the new line-of-credit or revolving-debt arrangement.

ASC 470-50-40-21 states that it applies to “[m]odifications to or exchanges of line-of-credit or revolving-debt arrangements resulting in either a new line-of-credit or revolving-debt arrangement or resulting in a traditional term-debt arrangement.” Accordingly, if a line-of-credit or revolving-debt arrangement is modified or exchanged so that it becomes, in whole or in part, a term-debt arrangement or delayed-draw term loan commitment with the same creditor, the debtor should apply the guidance on modifications of line-of-credit or revolving-debt arrangements (see Section 10.6.2). Note that it would apply this guidance even if amounts were drawn under a line-of-credit or revolving-debt arrangement before its modification or exchange. If the borrowing capacity before the amendment exceeds the borrowing capacity after the amendment, a proportionate amount of the current unamortized deferred costs associated with the line-of-credit or revolving-debt arrangement is expensed and the remaining amount is allocated among any continuing line-of-credit or revolving-debt arrangement, delayed-draw term loan commitment, and term loan on a systematic and rational basis (e.g., on the basis of relative borrowing capacity). If the borrowing capacity after the amendment equals or exceeds the borrowing capacity before the amendment, the current amount of unamortized deferred costs associated with the line-of-credit or revolving-debt arrangement is allocated among any continuing line-of-credit or revolving-debt arrangement, delayed-draw term loan commitment, and term loan on a systematic and rational basis (e.g., first to the continuing line-of-credit or revolving-debt arrangement in proportion to the borrowing capacity that remains under that component of the arrangement and then to the new term loan). Any amounts allocated to the new term loan are accounted for as debt issuance costs of that debt (see Section 5.3.3).

If the original credit facility includes both outstanding term debt and a line of credit or revolving debt, it is often appropriate to analyze the modification or exchange separately for each of those components on the basis of the above guidance (e.g., when only one component is modified). Any amount of term debt outstanding before the amendment that is reallocated to an amount drawn under a line-of-credit or revolving-debt arrangement after the amendment would be analyzed under the guidance on modifications and exchanges of term debt. Any amount that was drawn under a line-of-credit or revolving-debt arrangement before the amendment that becomes an amount drawn under a term-debt arrangement after the modification or exchange is analyzed in accordance with the guidance on modifications of line-of-credit or revolving-debt arrangements. In some circumstances, it may be appropriate to analyze the modification or exchange in combination on the basis of the predominant characteristics of the overall credit facility (e.g., amounts are fully drawn and an increase in the interest rate of one component is compensated by a decrease in the interest rate of the other component). An entity should allocate the fees and costs incurred to amend a credit facility to the different components of the facility by using a reasonable and systematic approach that is consistently applied (e.g., relative fair value).

If a credit facility involves multiple lenders, and an individual creditor no longer participates in the credit facility, any term loan with that creditor is accounted for as an extinguishment unless the replacement of an original creditor with a new creditor, in substance, represents a transfer of the existing debt to a new debt holder (see Section 10.2.8). Any deferred costs related to a line-of-credit or revolving-debt arrangement or delayed-draw term loan commitment with a creditor that no longer participates in the credit facility would be written off through current-period earnings. If a new creditor is added to the credit facility, any term loan with that creditor is recognized as a new term loan and any costs attributable to a line-of-credit or revolving-debt arrangement or delayed-draw term loan commitment with that creditor is deferred as an asset, if appropriate.

The table below summarizes the above considerations.

Individual Creditors	Original Credit Facility	Amended Credit Facility	Accounting
Continuing creditor	Term debt	Term debt	Perform the 10 percent cash flow test and apply the guidance on conversion features (see Section 10.3) to determine whether the original term debt should be treated as modified or extinguished (see Section 10.4)
	Line of credit or revolver	Line of credit or revolver	Perform the borrowing-capacity test (see Section 10.6.2) to determine the accounting for any deferred costs
	Term debt	Line of credit or revolver	Perform the 10 percent cash flow test on the basis of the amount drawn and apply the guidance on conversion features (see Section 10.3) to determine whether the original term debt should be treated as modified or extinguished (see Section 10.4)
	Line of credit or revolver	Term debt	Perform the borrowing-capacity test (see Section 10.6.2) to determine the accounting for any deferred costs
No longer creditor	Term debt	N/A	Apply debt extinguishment accounting (see Section 9.3) to the related term loan
No longer creditor	Line of credit or revolver	N/A	Expense the related deferred financing costs
New creditor	N/A	Term debt	Recognize as a new term loan (see Chapters 4 and 5)
New creditor	N/A	Line of credit or revolver	Recognize an asset for the related deferred financing costs (see Section 5.4)

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This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.