Question

Write summary about the article in the link provided below.  

Please read the article and summarize it.

This summary must be three-fourths to one page long.

https://www.cpajournal.com/2017/11/22/improving-income-statement-reporting-debt-extinguishments/

Answer 1

Summary

Improving Income Statement Reporting of Debt Extinguishments

Financial Statements of an entity helps to provide an overview of the financial results and condition of the business. It comprises of Income statement and Positional Statement. Debt is considered to be extinguished when there is no further obligation to an external party to transfer economic benefits. Earlier debt extinguishment transactions were required to be reported separately. As per SFAS 145 issued by FSAB debt extinguishment gains and losses were treated as extraordinary items depending upon the judgement made by senior management such as Auditors and Managers. This is no longer practiced as Financial Statements users can't count on the past reporting of debt extinguishment transactions gains and losses to identify their presence and impact on the income reported. With the increase in the interest rates, there are oppurtunities for the senior management to recognize gains by refinancing existing low-interest-rate debt, which opportunities will only grow as rates continue increasing toward historical levels.