FASB Debt — Modifications and Extinguishments of Liabilities

Published: May 25, 2025

The TXCPA Professional Standards Committee submitted a comment letter to the FASB in response to the proposed Accounting Standards Update on Debt-Modifications and Extinguishments and Liabilities–Extinguishments of Liabilities.

FASB

(May 20, 2025) The TXCPA Professional Standards Committee (PSC) submitted a comment letter to the Financial Accounting Standards Board (FASB) in response to the proposed Accounting Standards Update (ASU) on Debt-Modifications and Extinguishments and Liabilities–Extinguishments of Liabilities (File Ref. No. 2025-ED200).

The PSC commended FASB’s efforts to simplify accounting for debt exchanges involving multiple creditors, supporting the proposal to treat such exchanges as extinguishments of old debt and issuances of new debt. The committee believes the amendments will improve consistency, align better with economic substance, reduce costs, and provide investors with more decision-useful information.

While the PSC agreed with most of the proposed scope and conditions, it recommended removing the term “customary marketing process” due to potential application and audit challenges. The committee also supported prospective application and early adoption without requiring retrospective adjustments or extensive transition disclosures.

The PSC concluded that the proposed amendments will streamline debt accounting practices, particularly for complex transactions involving multiple creditors.

View request for comment | View TXCPA PSC comment letter

 

 

 

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