# ASC 470-60-10: Debt — Troubled Debt Restructurings by Debtors — 10 Objectives

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/470/60/#10-objectives)

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## ASC 470-60-10: 10 Objectives

[Read section](https://asc.understandingaccounting.org/asc/470/60/#10-objectives)

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##### [470-60-10-1](https://asc.understandingaccounting.org/asc/470/60/#470-60-10-1)

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The accounting for restructured debt is based on the substance of the modifications—the effect on cash flows—not on the labels chosen to describe those cash flows. The substance of all modifications of a debt in a [troubled debt restructuring](https://asc.understandingaccounting.org/glossary/t/#troubled-debt-restructuring "A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider.") is essentially the same whether they involve modifications of any of the following:

1.  a
    
    Timing
    
2.  b
    
    Amounts designated as interest
    
3.  c
    
    Amounts designated as face amounts.

##### [470-60-10-2](https://asc.understandingaccounting.org/asc/470/60/#470-60-10-2)

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All of those kinds of modifications affect future cash receipts or payments and therefore affect both of the following:

1.  a
    
    The creditor's total return on the receivable, its effective interest rate, or both
    
2.  b
    
    The debtor's total cost on the payable, its effective interest rate, or both.