Accounting implications for CFOs
The COVID-19 global pandemic has resulted in economic consequences that many reporting entities may not have had to previously consider. One of those consequences is their ability to repay loans. In response, some lenders have agreed to changing the borrowing terms or providing waivers or modifications to debt covenant arrangements. Any changes to the terms of loan agreements, for example providing any kind of payment holidays on either principal or interest or changing interest rates, should be carefully assessed.
This publication will discuss the impact of these change and the accounting of debt modification, depending on whether or not a debt modification is substantial.