9.1 Background

A debtor accounts for debt as extinguished when the debt has been repaid or the debtor is legally released from its repayment obligation (see Section 9.2). The debtor generally recognizes a gain or loss for the difference between the reacquisition price and the net carrying amount of the debt upon an extinguishment (see Section 9.3.1). However, not all extinguishments are accounted for in the same manner (see Sections 9.3.2 through 9.3.8). In certain circumstances, financial liabilities for prepaid stored-value products are derecognized even though they have not been legally extinguished (see Section 9.4). Further, some debt modifications are accounted for as debt extinguishments even though the debt is still outstanding (see Section 10.4.2).