At a supplied extinguishment date, stop the old schedule and reconstruct net carrying amount. Adjust face for unamortized discount or premium, issuance costs, and any separately scoped items. Compare that amount with attributable reacquisition consideration and record the resulting gain or loss.
The arithmetic cannot decide whether an exchange or changed terms extinguish the old debt. Current Subtopic 470-50 controls; the paused project remains a standards-clock note.
Compare consideration with net carrying amount
ASC 470-50-40-2 requires the difference between reacquisition price and net carrying amount to enter current income as a gain or loss. The calculation begins only after the old liability qualifies for extinguishment.
Suppose net carrying amount is $612,400 and attributable reacquisition price is $625,000. The issuer records a $12,600 loss because it gives up more than the liability's book amount. Remove face, remaining discount or premium, and issuance-cost layers through the same workpaper. Fees, accrued interest, and exchange terms need their own supported attribution. A signed offer alone does not establish derecognition.
Put the concept to work
Analyze this concept
- Measure a supplied debt extinguishment from reacquisition consideration and net carrying amount, including unamortized basis layers, without inventing the derecognition conclusion.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- Debt reacquisition price — Apply
To analyze this concept: Required. The supplied consideration is compared with net carrying amount.
- Derecognition — Understand
To analyze this concept: Required. The old liability leaves the books only after the derecognition gate is met.