Debt Accounting Update - Applying ASU 2020-06 and Other Challenges in Accounting for Debt
Thursday, October 14, 2021
From its classification to the accounting for its issuance and conversion, accounting for issued debt can be very complex and is a frequent source of both financial statement restatements and peer review comments. To address this complexity, the FASB issued ASU No. 2020-06, which, while simplifying the accounting models for convertible debt, nonetheless retains 3 models for convertible debt. Further, careful analysis is required to determine the classification of debt between short- and long-term, especially when a company violates a debt covenant as well as to account for modifications to debt arrangements.
This course reviews the changes in debt accounting with the issuance of ASU No. 2020-06, detailing the three remaining models for convertible debt. It will also review the classification of debt in a variety of fact patterns and address how to differentiate between debt modifications and extinguishments.
- Recall the current accounting models, and their criteria for convertible debt
- Identify how ASU 2020-06 simplifies the accounting for convertible debt
- Comprehend the nuances of classifying debt between current and noncurrent
- Recall how to account for amendments to debt arrangements
- The existing accounting models for convertible debt
- What changes in accounting for convertible debt with the issuance of ASU No. 2020-06
- Debt classification issues
- Accounting for amendments to debt agreements