# ASC 470-60-55: Debt — Troubled Debt Restructurings by Debtors — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/470/60/#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): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:75604a787542be6bd77c68526bd923f44624b5a2fc7804cb40736e15eb23c95a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-60-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/470/60/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [470-60-55-1](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:c6251f4b0f9ed127c56d1599e5235ad54aa0a8c538038bab178ef9145117b099 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities involved with Chapter 11 bankruptcy proceedings frequently reduce all or most of their indebtedness with the approval of their creditors and the court in order to provide an opportunity for the entity to have a fresh start. Such reductions are usually by a stated percentage so that, for example, the debtor owes only 60 cents on the dollar. Because the debtor would be restating its liabilities generally, this Subtopic would not apply to the debtor's accounting for such reduction of liabilities. ##### [470-60-55-2](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:894152a3e14452b12d13d50948885dc90a82132bae19ffb4bc4b0c2ad90b6f9e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the other hand, this Subtopic would apply to an isolated [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.") by a debtor involved in bankruptcy proceedings if such restructuring did not result in a general restatement of the debtor's liabilities. ##### [470-60-55-3](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:854a88ee017c0204eedae17b205b9d20c58a1ecd66096a0c99b97e853a78e447 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To a debtor, a bond constitutes one payable even though there are many bondholders. ##### [470-60-55-4](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:6c49571ee2e5998f262aa22bd123813b0aad6a60850e943d95cf14cbcc6b8085 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. No single characteristic or factor, taken alone, is determinative of whether a modification or exchange is a troubled debt restructuring under this Subtopic. That is, the fact that a single characteristic is present in a transaction (such as that described in paragraph [470-60-15-9(c)(3)](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-9) or [470-60-15-12(d)](https://asc.understandingaccounting.org/asc/470/60/#470-60-15-12)) should not be considered sufficient to overcome the preponderance of contrary evidence. Determining whether a transaction is within the scope of this Subtopic requires the exercise of judgment. The guidance that follows is not limited to marketable debt instruments. ##### [470-60-55-5](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:74f9f9e6c7a7622ec27e0d7ea24f8b98074200c1204a1dfaca09d6679c6554be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following model should be applied by a debtor when determining whether a modification or an exchange of debt instruments is within the scope of this Subtopic. - ![](https://asc.understandingaccounting.org/asc-img/GUID-04BDABDF-BBFD-4577-B6ED-02D88AFF7044-low.gif) ##### [470-60-55-6](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:ea2fc659ab76b64dcf1991f0ccf17e7ca0761d7e06260de289768d1fa28d99a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors have no relevance in the determination of whether a modification or an exchange is within the scope of this Subtopic: 1. a The amount invested in the old debt by the current creditors 2. b The [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the old debt immediately before the modification or exchange compared to the fair value of the new debt at issuance 3. c Transactions among debt holders. In addition, the length of time the current creditors have held the investment in the old debt is not relevant in the determination of whether a modification or exchange is within the scope of this Subtopic unless all the current creditors recently acquired the debt from the previous debt holders to effect what is in substance a planned refinancing. ##### [470-60-55-7](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:c185e184b03c176c9c65c838871831ca9bf1e0b3013551af9189110a8e8045b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the debtor's creditworthiness (for example, based on its credit rating or equivalent, the effects of the original collateral or credit enhancements in the debt, or its sector risk) has deteriorated since the debt was originally issued, the debtor should evaluate whether it is experiencing financial difficulties. Changes in an investment-grade credit rating are not considered a deterioration in the debtor's creditworthiness for purposes of this guidance. Conversely, a decline in credit rating from investment grade to noninvestment grade is considered a deterioration in the debtor's creditworthiness for purposes of this guidance. ##### [470-60-55-8](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:8ac9f9948522ede2873cd4505c7282ce5f82b75b7cfa7da9819fe75c763bf685 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following factors are indicators that the debtor is experiencing financial difficulties: 1. a The debtor is currently in default on any of its debt. 2. b The debtor has declared or is in the process of declaring bankruptcy. 3. c There is significant doubt as to whether the debtor will continue to be a going concern. 4. d Currently, the debtor has securities that have been delisted, are in the process of being delisted, or are under threat of being delisted from an exchange. 5. e Based on estimates and projections that only encompass the current business capabilities, the debtor forecasts that its entity-specific cash flows will be insufficient to service the debt (both interest and principal) in accordance with the contractual terms of the existing agreement through maturity. 6. f Absent the current modification, the debtor cannot obtain funds from sources other than the existing creditors at an effective interest rate equal to the current market interest rate for similar debt for a nontroubled debtor. ##### [470-60-55-9](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:e053653323091b37c916f9e9b64ad535f3aa8c3e44e418fe772b360d31ddb046 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Notwithstanding the above, the following factors, if both are present, provide determinative evidence that the debtor is not experiencing financial difficulties, and, thus, the modification or exchange is not within the scope of this Subtopic (the presence of either factor individually would be an indicator, but not determinative, that the debtor is not experiencing financial difficulty): 1. a The debtor is currently servicing the old debt and can obtain funds to repay the old prepayable debt from sources other than the existing creditors (without regard to the current modification) at an effective interest rate equal to the current market interest rate for a nontroubled debtor. 2. b The creditors agree to restructure the old debt solely to reflect a decrease in current market interest rates for the debtor or positive changes in the creditworthiness of the debtor since the debt was originally issued. ##### [470-60-55-10](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:d30b30bb46d30bf6ffcc75ab90e0ec08c8720fa2ecd0cf0f248c2bc5e67158a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A creditor is deemed to have granted a concession if the debtor's effective borrowing rate on the restructured debt is less than the effective borrowing rate of the old debt immediately before the restructuring. The effective borrowing rate of the restructured debt (after giving effect to all the terms of the restructured debt including any new or revised options or warrants, any new or revised guarantees or letters of credit, and so forth) should be calculated by projecting all the cash flows under the new terms and solving for the discount rate that equates the present value of the cash flows under the new terms to the debtor's current [carrying amount](https://asc.understandingaccounting.org/glossary/c/#carrying-amount "For a receivable, the face amount increased or decreased by applicable accrued interest and applicable unamortized premium, discount, finance charges, or issue costs and also an allowance for uncollectible amounts and other valuation accounts.For a payable, the face amount increased or decreased by applicable accrued interest and applicable unamortized premium, discount, finance charges, or issue costs")of the old debt. ##### [470-60-55-11](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:92272c63336898264535ec2a55c09fda533dfc4a1fd29b555957ceebe8213370 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The carrying amount for purposes of this test would not include any hedging effects (including basis adjustments to the old debt) but would include any unamortized premium, discount, issuance costs, accrued interest payable, and so forth. ##### [470-60-55-12](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:8fe14bc0dd7a8c52eeb7b90d112c34a1d72dd6220b640d22f25b2e7d673d546b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When determining the effect of any new or revised sweeteners (options, warrants, guarantees, letters of credit, and so forth), the current fair value of the new sweetener or change in fair value of the revised sweetener would be included in day-one cash flows. If such sweeteners are not exercisable for a period of time, that delay is typically considered within the estimation of the initial fair value as of the debt's modification date. ##### [470-60-55-13](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:c6cf53a9fee85b5ea53a4d292195a57c2596ba662bb7102413f00223bd20660d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although considered rare, if there is persuasive evidence that the decrease in the effective borrowing rate is due solely to a factor that is not captured in the mathematical calculation (for example, additional collateral), the creditor may not have granted a concession and the modification or exchange should be evaluated based on the substance of the modification. ##### [470-60-55-14](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:d502b52b701cf057ccec12940fe9000cfe30be0f2627e58062b1ad92215d5e63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Notwithstanding the guidance in this Section, if an entity has recently restructured the debt and is currently restructuring that debt again, the effective borrowing rate of the restructured debt (after giving effect to all the terms of the restructured debt including any new or revised options or warrants, any new or revised guarantees or letters of credit, and so forth) should be calculated by projecting all the cash flows under the new terms and solving for the discount rate that equates the present value of the cash flows under the new terms to the debtor's previous carrying amount of the debt immediately preceding the earlier restructuring. In addition, the effective borrowing rate of the restructured debt should be compared with the effective borrowing rate of the debt immediately preceding the earlier restructuring for purposes of determining whether the creditor granted a concession (that is, whether the effective borrowing rate decreased). ##### [470-60-55-15](https://asc.understandingaccounting.org/asc/470/60/#470-60-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:33:31.252Z to 2026-09-10T00:33:31.252Z Record version: sha256:b8243e4cda79957b4744031438607e75b0672bb12e8bc9b4963ddc7702ab8e61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2022-02](https://asc.understandingaccounting.org/updates/asu-2022-02/).