The proper classification of debt is generally critical for the fair presentation of financial statements, as the nature and extent of current obligations would likely influence the economic decisions of financial statement users. In fact, debt is a critical element in many important financial statement ratios, such as those related to liquidity and leverage. Unfortunately, Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) guidance related to the classification of debt can be complex in some situations, based on application of narrow authoritative rules and fact patterns.
This course covers the proper treatment and resolution of the most common debt classification and disclosure issues faced by entities financed by long-term debt arrangements.
Course Series
This course is included in the following series:
6 CoursesAn Auditor's Perspective on...
- Preparing Financial Statements - An Auditor’s Perspective on What Matters Most
- Independence Rules for CPA’s - An Auditor’s Perspective on Significant AICPA, Public Company, Governmental, and International Differences
- Designing and Performing Sampling Plans – An Auditor’s Perspective on Monitoring Internal Controls, Compliance, and the Reasonableness of Account Balances
- FASB ASC Section 205-40: Going Concern Uncertainty – An Auditor’s Perspective
- FASB ASC Topic 470: Debt – An Auditor’s Perspective on Common Balance Sheet Classification Issues
- FASB ASC Topic 820 Fair Value – An Auditor’s Perspective on Determining Fair Value of Non-Readily Marketable Investments
Learning Objectives
- Discover how to properly classify various debt obligations between current and long-term based on the nature and terms of the financing arrangement.
- Discover the factors that influence presentation, such as debt due on demand, callable debt, subjective acceleration clauses, compliance with debt covenants, revolving credit arrangements, and short-term debt in the process of being refinanced.
- Explore the required elements of a properly worded waiver letter, which would allow debt to continue to be classified as long-term, despite debt covenant violations that make the debt callable by the creditor.
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Prerequisites
No advanced preparation or prerequisites are required for this course.
Education Provider Information
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