What constitutes a troubled debt restructure?

A troubled debt restructuring (TDR) is defined as a debt restructuring in which a creditor, for economic or legal reasons related to a debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider.

What is included in deferred financing costs?

Deferred Financing Costs are the additional costs that a company pays to obtain the loan or issuing debt securities. These costs include lawyer fees, auditor, commission and investment bank fee, etc. When the company obtains loans or issue bonds, it is very common to incur some fees to the third parties.

Are all non accrual loans impaired?

states “Nonaccrual loans in the commercial and commercial real estate portfolios are, by definition, deemed to be impaired”.

What are financing receivables ASC 310?

310-10-05-4 Receivables may arise from credit sales, loans, or other transactions. Receivables may be in the form of loans, notes, and other types of financial instruments and may be originated by an entity or purchased from another entity.

Which two conditions must be met in order for a debt modification to be accounted for as a troubled debt restructuring?

The ASU provides additional guidance to help creditors determine if the two TDR criteria have been met: (1) whether a concession has been granted to a borrower and (2) whether a borrower is experiencing financial difficulties.

How does a company restructure debt?

The debt restructuring process typically involves getting lenders to agree to reduce the interest rates on loans, extend the dates when the company’s liabilities are due to be paid, or both. These steps improve the company’s chances of paying back its obligations and staying in business.

Where do deferred financing fees go on the balance sheet?

Deferred financing fees (or debt issuance costs) are fees incurred in connection with issuance of debt (e.g. professional, legal, brokerage). Historically, these fees were presented as assets on the balance sheet and amortized over the life of the debt as part of interest costs.

Is amortization of financing fees tax deductible?

The most important distinction when it comes to debt financing costs is whether the loan is for business or personal reasons. Typically, most personal debt isn’t eligible for a tax deduction anyway, so the question of amortizing isn’t particularly relevant for tax purposes.

What are financing receivables?

Understanding Accounts Receivable Financing Accounts receivable are assets equal to the outstanding balances of invoices billed to customers but not yet paid. Accounts receivables are reported on a company’s balance sheet as an asset, usually a current asset with invoice payment required within one year.

What is allowance for doubtful debts?

An allowance for doubtful accounts is a contra account that nets against the total receivables presented on the balance sheet to reflect only the amounts expected to be paid. The allowance for doubtful accounts estimates the percentage of accounts receivable that are expected to be uncollectible.

What is purchase credit impaired?

The definition of a purchased or originated credit impaired (POCI) asset refers to assets for which on initial recognition “one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred,” such as significant financial difficulty, default, and additional …

What are FAS fees?

FAS 91 Fees means any fees received and deferred in accordance with Statement of Financial Accounting Standards No. 91, net of associated deferred costs.