# ASC 470-50-55: Debt — Modifications and Extinguishments — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/470/50/#55-implementation-guidance-and-illustrations) 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. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:7710ca96f1512c86072d79c4cfdc8378cf0f98bc8243443d12729f5c9ac5ccff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-50-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/470/50/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [470-50-55-1](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:2ade9f008865c206d045e5a6764d1f483552b286029baaf7653c530c24490438 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the definition of a [loan participation](https://asc.understandingaccounting.org/glossary/l/#loan-participation "A transaction in which a single lender makes a large loan to a borrower and subsequently transfers undivided interests in the loan to groups of banks or other entities."), 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. ##### [470-50-55-2](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:2eab9cbe0cc42af1c45157b995f679e927463784506676377fe69e691422885f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the definition of a [loan syndication](https://asc.understandingaccounting.org/glossary/l/#loan-syndication "A transaction in which several lenders share in lending to a single borrower. Each lender loans a specific amount to the borrower and has the right to repayment from the borrower. It is common for groups of lenders to jointly fund those loans when the amount borrowed is greater than any one lender is willing to lend."), 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. ##### [470-50-55-3](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:88778835bcdddee717fb6bdc833886581d4fa3ded1947e3e7963eecccb9f71d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a [public debt issuance](https://asc.understandingaccounting.org/glossary/p/#public-debt-issuance "A public debt issuance occurs when a debtor issues a number of identical debt instruments to an underwriter that sells the debt instruments (in the form of securities) to various investors."), 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. ##### [470-50-55-4](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:d315fefe700e89eca1a14acfccf7d81f27e1bbf20053ae67f8f6e2eddfd16025 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [470-50-55-5](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:6b671aca27ed8c09f3151b085f993f4b88e5acad1e48778dfae7e662be72f9b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [470-50-55-6](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:cc67abb36f292e8bd2ad97450032f755a9dfee61c5c67dfb67b6b131cd53b119 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [470-50-55-7](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:450564667b895275106d2f40b0c0c7fc15edc2ae9037af39cc97ec5ea526ae11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transactions between a debtor and a third-party creditor should be analyzed based on the guidance in paragraph [405-20-40-1](https://asc.understandingaccounting.org/asc/405/20/#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. ##### [470-50-55-8](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:9d0a1bf6172f690b7a19aa4e777952c9acd86b576e58d9932ac7311ba17e8fd5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [470-50-55-9](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:e1bf385b52d773625db3e3a04d5cff6f329281a168841966d10a619809063b18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/405/20/#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](https://asc.understandingaccounting.org/glossary/i/#in-substance-defeasance "Placement by the debtor of amounts equal to the principal, interest, and prepayment penalties related to a debt instrument in an irrevocable trust established for the benefit of the creditor.") 3. c An agreement with a creditor that a debt instrument issued by the debtor and held by a different party will be redeemed. #### Illustrations ##### [470-50-55-10](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:8860aaaf38a79e6c2a183c5484307d2549dc2f112243a02a35b10f2e16bbd76f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the application of the guidance in paragraphs [470-50-40-21 through 40-22](https://asc.understandingaccounting.org/asc/470/50/#470-50-40-21) for changes in [line-of-credit or revolving-debt arrangements](https://asc.understandingaccounting.org/glossary/l/#line-of-credit-arrangement "A line-of-credit or revolving-debt arrangement is an agreement that provides the borrower with the option to make multiple borrowings up to a specified maximum amount, to repay portions of previous borrowings, and to then reborrow under the same contract. Line-of-credit and revolving-debt arrangements may include both amounts drawn by the debtor (a debt instrument) and a commitment by the creditor to make additional amounts available to the debtor under predefined terms (a loan commitment)."). ##### [470-50-55-11](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:ad6439aa2e9c8ebe957d4da9f1adf2ca6634996506a42301bb21e2dc36b16934 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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). ##### [470-50-55-12](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:bb016ba34761cfcef40e6f870c9864ea061629e543b04d4dff248e928f5a24c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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). ##### [470-50-55-13](https://asc.understandingaccounting.org/asc/470/50/#470-50-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:05.223Z to 2026-09-10T00:33:05.223Z Record version: sha256:c4d98c77731fb772c780ea193576eae0451dafb27ab36bb4e937327fdfa3cf2f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. - The following illustrates the various situations described in this Example. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-43E70402-AEF2-4168-BE3B-F2E1D57509AC-low.gif) Case Old Borrowing Capacity New Borrowing Capacity Accounting Treatment of Unamortized Deferred Costs Accounting Treatment of Fees and Third-Party Costs Incurred A 30 million 45 million "$150,000 is amortized over 3 years." "$300,000 is deferred and amortized over 3 years." B 30 million 11 million "63 percent of the unamortized costs ($94,500) are written off; the remaining costs ($55,500) are amortized over 5.5 years." "$300,000 is deferred and amortized over 5.5 years." C 30 million 22.5 million "25 percent of the unamortized costs ($37,500) are written off; the remaining costs ($112,500) are amortized over 3 years." "$300,000 is deferred and amortized over 3 years." D 30 million 30 million "$150,000 is amortized over 3 years." "$300,000 is deferred and amortized over 3 years."