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- Topic: Emergency!! Early retirement of debt.....
| Author | Topic: Emergency!! Early retirement of debt..... |
|---|---|
| lis2318 @2006-05-26 15:33:14 |
The questions I did on the website said gains or losses from Early retirement of debt are no longer extraordinary items under FASB 145. However, my study note from the other resource still mentions it is an extraordinary item. Of course, I search related information on internet, but still not make sure which one is correct. Does anyone know this? |
| SDog @2006-05-26 22:11:34 |
Here it is from the CFA books... Economics and Financial Statement Analysis Vol. II pg. 537... "Extraordinary items are intended to be rare; based on APB 30... In the early 1970's high interest rates and an economic recession led firms with depressed profits to refinance low coupon debt, whose market value was below the face amount, with high coupon debt, reporting an accounting gain. SFAS 4 (1975) broadened the classification of extraordinary items by requiring that gains or losses on qualifying early retirement of debt be classified as extraordinary. In April 2002, SFAS 145 rescinded SFAS 4. As a result, gains or losses on the early retirement of debt are extraordinary items only when the requirements of APB 30 are met." My interpretation is that it used to be an extraordinary item, but since 2002, they have tightened things up, now only it rare circumstances will early retirement of debt qualify, but it's still possible. That's my interpretation anyways. I had the same question, if anyone else can shed some further light that would be nice. |
CFA Discussion Topic: Emergency!! Early retirement of debt.....
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
