Accounting for Debt Instruments (Liabilities) (Portfolio 5105)

Description

Tax Management Portfolios 5105, Accounting for Debt Instruments (Liabilities), analyzes the accounting and reporting of long-term debt and other debt instruments. This Portfolio is written from the standpoint of the issuer of debt instruments, i.e., the issuer of bonds, notes, and other long-term instruments promising to repay money borrowed by the issuer of the debt instrument. Tax Management Portfolios 5106, Kohlbeck, Accounting for Investments in Debt Securities, addresses the subject from the perspective of an investor in debt instruments.

Discussion in the Portfolio applies to companies whose accounting and financial reporting is subject to U.S. Generally Accepted Accounting Principles as promulgated by the Financial Accounting Standards Board, the FASB’s predecessors, and the U.S. Securities and Exchange Commission. Each section focuses on specific pronouncements that affect the accounting for issues covered in that section, but the Portfolio highlights interrelationships among pronouncements.

The Portfolio is organized as follows: Section I and Section II discuss the common terms and economic concepts relating to debt instruments and their definitions. The terms are presented in a logical, rather than an alphabetical sequence, and are intended as a resource supporting other sections of the Portfolio. Section III distinguishes between debt liabilities and equity, Section IV discusses the classification of liabilities on the balance sheet, and Section V discusses the recording a debt liability. The final three Sections address principles and issues associated with equity-linked debt instruments, hedging of debt liabilities, and the exchange, modification, extinguishment, conversion, and restructuring of debt.

The Portfolio is designed to be a building block in the Bloomberg Tax Accounting Policy and Practice Series. Hence, other Portfolios may cover certain topics in greater depth. For example, Section V discusses certain aspects of ASC 815, however, Tax Management Portfolios 5112, Johnson & Grossman, Accounting and Disclosure for Derivative Instruments analyzes ASC 815 and related issues in greater depth.

This Portfolio may be cited as Tax Management Portfolios 5105, Keinan, Accounting for Debt Instruments (Liabilities) (Accounting Policy and Practice Series).

Table of Contents

I. Glossary of Relevant Terms
II. Economic Concepts Pertaining to Debt Instruments
III. Distinguishing Between Debt Liabilities and Equity
IV. Balance Sheet Classification of Liabilities
V. Recording a Debt Liability
VI. Equity-Linked Debt Instruments
VII. Hedging of Debt Liabilities
VIII. Exchange, Modification, Extinguishment, Conversion, and Restructuring of Debt