FASB issues guidance on debt restructurings and modifications

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The Financial Accounting Standards Board has released a staff educational paper offering an overview of the accounting guidance for debt restructurings and modifications.

The document includes examples of some common restructurings and modifications. FASB’s staff developed the educational paper after hearing requests from various stakeholders, including its Private Company Council.

But while the paper provides a helpful educational resource, FASB cautioned that companies should still consider the specific facts and circumstances of modifications to and restructurings of their debt arrangements to decide on the appropriate accounting to use.

“Since the onset of the pandemic, many stakeholders have either had to apply guidance on debt restructurings or modifications for the first time or have had to do so more frequently,” said FASB technical director Hillary Salo in a statement Wednesday. “The FASB staff educational paper helps them navigate relevant guidance in these areas and serves as another resource to help stakeholders successfully navigate accounting standards during these difficult times.”

The paper is available through FASB’s COVID-19 web portal.

FASB, GASB and FAF logos on the wall at headquarters in Norwalk, Connecticut

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FASB Accounting standards Financial reporting Debt