troubled debt restructuring

ASC 310-40 formerly contained the creditor's accounting for troubled debt restructurings (TDRs) — the definition of a TDR, measurement of impairment on restructured loans, accounting for assets or equity interests received in satisfaction of a receivable, and TDR-specific disclosures. Every operative paragraph has been superseded, principally by ASU 2022-02 (which eliminated the TDR model for creditors that have adopted ASC 326), with earlier deletions by ASU 2016-13 and ASU 2014-09. The subtopic is now an empty shell: creditors account for modifications to borrowers experiencing financial difficulty under ASC 326 and ASC 310-10 instead.

ASC 470-60 governs how a debtor accounts for a troubled debt restructuring (TDR) — a restructuring in which the creditor, for economic or legal reasons related to the debtor's financial difficulties, grants a concession it would not otherwise consider (470-60-15-5). Settlements by transfer of assets or grant of an equity interest are measured at fair value, with a gain on restructuring equal to the excess of the payable's carrying amount over that fair value (470-60-35-2, 35-4). Pure modifications of terms are accounted for prospectively with no change in carrying amount and a new effective interest rate, unless total future cash payments (including contingent amounts) are less than the carrying amount, in which case the debtor writes down the payable and recognizes a gain (470-60-35-5 through 35-7).