FASB Holds August 26 Meeting

At its August 26, 2026, meeting, the FASB discussed debt modifications, extinguishments, and troubled debt restructurings, including feedback received on these topics as part of its 2025 invitation to comment on its agenda consultation. During the meeting, the Board decided to add to its technical agenda a project on debt modifications and exchanges. Specific tentative decisions the Board made on this topic include the following:

• Extinguishment accounting would be required for all exchanges and modifications that are within the scope of ASC 470-50 and that “affect the timing or amount of cash flows or the fair value of an embedded conversion option.”
• In “determining whether to apply modification or extinguishment accounting,” an entity would consider “all changes to cash flows, written call options, or conversion options.”
• In applying extinguishment accounting, entities other than public business entities can elect to use the principal amount of a “new or modified debt instrument” when initially measuring the instrument.
• The guidance on troubled debt restructurings for borrowers would be removed from ASC 470-60.
• Certain additional disclosures would be required for modifications and exchanges that are within the scope of ASC 470-50.

For more information, see the tentative Board decisions and Board meeting handout on the FASB’s Web site.