Debtor accounting for troubled-debt restructurings (TDR) is inconsistent with the two most recent revisions to the conceptual framework of accounting. This paper discusses the current accounting treatment of modifications of terms under a TDR and presents an alternative approach that is consistent with the conceptual framework. An example is provided to help students understand TDR accounting and more generally, the relationship between the conceptual framework of accounting and reporting standards.

This article is from the Accounting Instructors’ Report, an electronic journal that provides teaching tips and insights to those who teach accounting and other business courses.

Timothy B. Forsyth, Appalachian State University
Philip R. Witmer, Appalachian State University