Hi,
few years ago the company i work as a controller purchased an assets in installments for several years (included principal and interest components), we acknowledge an assets based on accounting standards (Capitalization based on interest rate)
today we made a new agreement with the vendor to clear (within 3 months) the rest of the liability in return for a significant discount.
my question as follow:
after the new agreement i need to reduce the liability in the books against what?
1. is it against the Assets (which can be a problem as there are no actual evidence Impairment) ? or
2. is it against profit or loss (similar to gain result of an Early redemption of financial instrument such as Bond)?
the company presents financial information in accordance with US GAAP .
Manny thanks respondents.
few years ago the company i work as a controller purchased an assets in installments for several years (included principal and interest components), we acknowledge an assets based on accounting standards (Capitalization based on interest rate)
today we made a new agreement with the vendor to clear (within 3 months) the rest of the liability in return for a significant discount.
my question as follow:
after the new agreement i need to reduce the liability in the books against what?
1. is it against the Assets (which can be a problem as there are no actual evidence Impairment) ? or
2. is it against profit or loss (similar to gain result of an Early redemption of financial instrument such as Bond)?
the company presents financial information in accordance with US GAAP .
Manny thanks respondents.