{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/470/50/#55-implementation-guidance-and-illustrations","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"470","topic_title":"Debt","subtopic":"470-50","subtopic_title":"Modifications and Extinguishments","section":{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Implementation Guidance","paragraphs":[{"citation":"470-50-55-1","para":"55-1","html":"
Based on the definition of a loan participation, for purposes of applying the guidance in this Subtopic, the debt instrument would be the contract between the debtor and the lead bank. Participating banks are not direct creditors but, rather, have an interest represented by a certificate of participation. In the event of a modification or exchange between the debtor and lead bank, the debtor shall apply the guidance in this Subtopic.
","snippet":"Based on the definition of a loan participation, for purposes of applying the guidance in this Subtopic, the debt instrument would be the contract between the debtor and the lead bank. Participating banks are not direct …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2ade9f008865c206d045e5a6764d1f483552b286029baaf7653c530c24490438","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}},{"citation":"470-50-55-2","para":"55-2","html":"
Based on the definition of a loan syndication, for purposes of applying the guidance in this Subtopic, separate debt instruments exist between the debtor and the individual creditors participating in the syndication. If an exchange or modification offer is made to all members of the syndicate and only some of the creditors agree to the exchange or modification, the guidance in this Subtopic would be applied to debt instruments held by those creditors that agree to the exchange or modification. Debt instruments held by those creditors that do not agree would not be affected.
","snippet":"Based on the definition of a loan syndication, for purposes of applying the guidance in this Subtopic, separate debt instruments exist between the debtor and the individual creditors participating in the syndication. If …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2eab9cbe0cc42af1c45157b995f679e927463784506676377fe69e691422885f","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}},{"citation":"470-50-55-3","para":"55-3","html":"
In a public debt issuance, for purposes of applying the guidance in this Subtopic, the debt instrument is the individual security held by an investor, and the creditor is the security holder. If an exchange or modification offer is made to all investors and only some agree to the exchange or modification, then the guidance in this Subtopic shall be applied to debt instruments held by those investors that agree to the exchange or modification. Debt instruments held by those investors that do not agree would not be affected.
","snippet":"In a public debt issuance, for purposes of applying the guidance in this Subtopic, the debt instrument is the individual security held by an investor, and the creditor is the security holder. If an exchange or modificati…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:88778835bcdddee717fb6bdc833886581d4fa3ded1947e3e7963eecccb9f71d1","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}},{"citation":"470-50-55-4","para":"55-4","html":"
In transactions involving a third-party investment banker acting as agent on behalf of the debtor, the activity of the investment banker is treated as if it were the activity of the debtor. Thus, if the investment banker acquires debt instruments from holders for cash, the debtor has an extinguishment even if the investment banker subsequently transfers a debt instrument with the same or different terms to the same or different investors. If the investment banker acting as agent on behalf of the debtor acquires instruments from holders by exchanging those instruments for new debt, the guidance in this Subtopic shall be applied. If the investment banker acquires debt instruments from holders for cash and contemporaneously issues new debt instruments for cash, an extinguishment has occurred only if the two debt instruments have substantially different terms, as defined in Section 470-50-40.
","snippet":"In transactions involving a third-party investment banker acting as agent on behalf of the debtor, the activity of the investment banker is treated as if it were the activity of the debtor. Thus, if the investment banker…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d315fefe700e89eca1a14acfccf7d81f27e1bbf20053ae67f8f6e2eddfd16025","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}},{"citation":"470-50-55-5","para":"55-5","html":"
In transactions involving a third-party investment banker acting as principal, the investment banker is considered a debt holder like other debt holders. Thus, if the investment banker acting as principal acquires debt instruments from other parties, the acquisition by the investment banker does not impact the accounting by the debtor, and exchanges or modifications between the debtor and the investment banker shall follow the guidance in this Subtopic.
","snippet":"In transactions involving a third-party investment banker acting as principal, the investment banker is considered a debt holder like other debt holders. Thus, if the investment banker acting as principal acquires debt i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6b671aca27ed8c09f3151b085f993f4b88e5acad1e48778dfae7e662be72f9b7","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}},{"citation":"470-50-55-6","para":"55-6","html":"
If a debt instrument is transferred from one debt holder to another in connection with a modification or exchange, including transfers from an intermediary acting as principal to another debt holder, the debtor is not impacted by the exchange as long as the funds do not pass through the debtor or its agent.
","snippet":"If a debt instrument is transferred from one debt holder to another in connection with a modification or exchange, including transfers from an intermediary acting as principal to another debt holder, the debtor is not im…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cc67abb36f292e8bd2ad97450032f755a9dfee61c5c67dfb67b6b131cd53b119","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}},{"citation":"470-50-55-7","para":"55-7","html":"
Transactions between a debtor and a third-party creditor should be analyzed based on the guidance in paragraph 405-20-40-1 and the guidance in this Subtopic to determine whether gain or loss recognition is appropriate. Application of the guidance in this Subtopic may require determination of whether a third-party intermediary is an agent or a principal and consideration of legal definitions may be helpful in making that determination. Generally, an agent acts for and on behalf of another party. Therefore, a third-party intermediary is an agent of a debtor if it acts on behalf of the debtor. In addition, an evaluation of the facts and circumstances surrounding the involvement of a third-party intermediary should be performed. The following indicators should be considered in that evaluation:
  1. a
    If the intermediary's role is restricted to placing or reacquiring debt for the debtor without placing its own funds at risk, that would indicate that the intermediary is an agent. For example, that may be the case if the intermediary's own funds are committed and those funds are not truly at risk because the intermediary is made whole by the debtor (and therefore is indemnified against loss by the debtor). If the intermediary places and reacquires debt for the debtor by committing its funds and is subject to the risk of loss of those funds, that would indicate that the intermediary is acting as principal.
  2. b
    In an arrangement where an intermediary places notes issued by the debtor, if the placement is done under a best-efforts agreement, that would indicate that the intermediary is acting as agent. Under a best-efforts agreement, an agent agrees to buy only those securities that it is able to sell to others; if the agent is unable to remarket the debt, the issuer is obligated to pay off the debt. The intermediary may be acting as principal if the placement is done on a firmly committed basis, which requires the intermediary to hold any debt that it is unable to sell to others.
  3. c
    If the debtor directs the intermediary and the intermediary cannot independently initiate an exchange or modification of the debt instrument, that would indicate that the intermediary is an agent. The intermediary may be a principal if it acquires debt from or exchanges debt with another debt holder in the market and is subject to loss as a result of the transaction.
  4. d
    If the only compensation derived by an intermediary from its arrangement with the debtor is limited to a preestablished fee, that would indicate that the intermediary is an agent. If the intermediary derives gains based on the value of the security issued by the debtor, that would indicate that the intermediary is a principal.
","snippet":"Transactions between a debtor and a third-party creditor should be analyzed based on the guidance in paragraph 405-20-40-1 and the guidance in this Subtopic to determine whether gain or loss recognition is appropriate. A…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:450564667b895275106d2f40b0c0c7fc15edc2ae9037af39cc97ec5ea526ae11","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}},{"citation":"470-50-55-8","para":"55-8","html":"
This Subtopic applies to transactions in which the terms of a debt instrument are modified through execution of a binding contract between the debtor and creditor that requires a debt instrument to be redeemed at a future date for a specified amount.
","snippet":"This Subtopic applies to transactions in which the terms of a debt instrument are modified through execution of a binding contract between the debtor and creditor that requires a debt instrument to be redeemed at a futur…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9d0a1bf6172f690b7a19aa4e777952c9acd86b576e58d9932ac7311ba17e8fd5","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}},{"citation":"470-50-55-9","para":"55-9","html":"
The following situations do not result in an extinguishment and would not result in gain or loss recognition under either paragraph 405-20-40-1 or this Subtopic:
  1. a
    An announcement of intent by the debtor to call a debt instrument at the first call date
  2. b
    In-substance defeasance
  3. c
    An agreement with a creditor that a debt instrument issued by the debtor and held by a different party will be redeemed.
","snippet":"The following situations do not result in an extinguishment and would not result in gain or loss recognition under either paragraph 405-20-40-1 or this Subtopic:\n(a) An announcement of intent by the debtor to call a debt…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e1bf385b52d773625db3e3a04d5cff6f329281a168841966d10a619809063b18","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:34efcaef3b9e9c04cb454ae520cd2afc7b33d260107980fef6c836198d2ecb4a","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"470-50-55-10","para":"55-10","html":"
This Example illustrates the application of the guidance in paragraphs
470-50-40-21 through 40-22
for changes in line-of-credit or revolving-debt arrangements.
","snippet":"This Example illustrates the application of the guidance in paragraphs 470-50-40-21 through 40-22 for changes in line-of-credit or revolving-debt arrangements.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8860aaaf38a79e6c2a183c5484307d2549dc2f112243a02a35b10f2e16bbd76f","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}},{"citation":"470-50-55-11","para":"55-11","html":"
Terms of original arrangement are as follows:
  1. a
    Five-year term (three years remaining)
  2. b
    $10 million commitment amount
  3. c
    The borrowing capacity under the original arrangement at the time of the change is $30 million, the product of the remaining term (3 years) and the commitment amount ($10 million).
","snippet":"Terms of original arrangement are as follows:\n(a) Five-year term (three years remaining)\n(b) $10 million commitment amount\n(c) The borrowing capacity under the original arrangement at the time of the change is $30 millio…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ad6439aa2e9c8ebe957d4da9f1adf2ca6634996506a42301bb21e2dc36b16934","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}},{"citation":"470-50-55-12","para":"55-12","html":"
The following situations represent changes that are made (with the same creditor) to the original terms:
  1. a
    The commitment amount is increased to $15 million, the term of the new arrangement remains at 3 years (borrowing capacity is $45 million).
  2. b
    The commitment amount is decreased to $2 million, the term of the new arrangement is 5.5 years (borrowing capacity is $11 million).
  3. c
    The original revolver is replaced with a 3-year, $7.5 million term loan, with principal due at the end of 3 years (borrowing capacity is $22.5 million).
  4. d
    The original revolver is replaced with a 3-year, $10 million term loan, with principal due at the end of 3 years (borrowing capacity is $30 million).
","snippet":"The following situations represent changes that are made (with the same creditor) to the original terms:\n(a) The commitment amount is increased to $15 million, the term of the new arrangement remains at 3 years (borrowin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bb016ba34761cfcef40e6f870c9864ea061629e543b04d4dff248e928f5a24c0","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}},{"citation":"470-50-55-13","para":"55-13","html":"
In all of the situations described, at the time the change is made to the original arrangement, $150,000 of unamortized costs relating to the original arrangement remain on the debtor's balance sheet; the debtor pays a fee of $100,000 to the creditor; and the debtor incurs third-party costs of $200,000.
","snippet":"In all of the situations described, at the time the change is made to the original arrangement, $150,000 of unamortized costs relating to the original arrangement remain on the debtor's balance sheet; the debtor pays a f…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c4d98c77731fb772c780ea193576eae0451dafb27ab36bb4e937327fdfa3cf2f","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:94fbc5fd6c1fec32b3e9e9bf192498d302945a54bdc3e1005d9c9665af7b0ec7","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7710ca96f1512c86072d79c4cfdc8378cf0f98bc8243443d12729f5c9ac5ccff","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7710ca96f1512c86072d79c4cfdc8378cf0f98bc8243443d12729f5c9ac5ccff","downloaded_from":"2026-09-10T00:33:05.223Z","last_downloaded_at":"2026-09-10T00:33:05.223Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481213","source_sha256":"4421997bc0e8ecfe59fcd8d4e1c1cd02c815a4d47c679d1b839af777639320ab"}}