# ASC 310-942-05: Receivables — Financial Services—Depository and Lending — 05 Overview and Background

Source: FASB Accounting Standards Codification, Basic View

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## ASC 310-942-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/310/942/#05-overview-and-background)

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##### [310-942-05-1](https://asc.understandingaccounting.org/asc/310/942/#310-942-05-1)

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This Subtopic provides guidance on accounting for debt-equity swap programs.

##### [310-942-05-2](https://asc.understandingaccounting.org/asc/310/942/#310-942-05-2)

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This Subtopic addresses situations where a financially troubled country may suspend the payment of interest on its loans. Banks with outstanding loans from such a country have also suspended accrual of interest income (placed them on nonaccrual status). A country that has suspended payment of interest may later resume payment.

##### [310-942-05-3](https://asc.understandingaccounting.org/asc/310/942/#310-942-05-3)

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[Debt-equity swap](https://asc.understandingaccounting.org/glossary/d/#debt-equity-swap "A debt-equity swap is an exchange transaction of a monetary asset for a nonmonetary asset.") programs are in place in several financially troubled countries. Although the programs differ somewhat among the countries, the principal elements of each program generally are as follows:

1.  a
    
    Holders of U.S.-dollar-denominated debt of these countries can choose to convert that debt into approved local equity investments.
    
2.  b
    
    The holders are credited with local currency, at the official exchange rate, approximately equal to the U.S. dollar debt.
    
3.  c
    
    A discount from the official exchange rate is usually imposed as a transaction fee.
    
4.  d
    
    The local currency credited to the holder must be used for an approved equity investment.
    
5.  e
    
    The local currency is not available to the holders for any other purpose.
    
6.  f
    
    Dividends on the equity investment can generally be paid annually, although there may be restrictions on the amounts of the dividends or on payment of dividends in the early years of the investment.
    
7.  g
    
    Capital usually cannot be repatriated for several years, and although some countries permit the investment to be sold, the proceeds from any such sale are generally subject to similar repatriation restrictions.

##### [310-942-05-4](https://asc.understandingaccounting.org/asc/310/942/#310-942-05-4)

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[Paragraph superseded by Accounting Standards Update No. 2016-13](https://asc.understandingaccounting.org/updates/asu-2016-13/).