A	B	C	D
1		Ways of settling a non-convertible financial liability [FL]:
2		Payment of cash or cash equivalent. Exchange a non-cash asset (NCA). Exchange equity ["debt/equity swop"]. Settled using cash proceeds from the issuance of a new financial liability. "Substantial" FL exchange [swop/restructure/refinancing] with an existing creditor in the same currency. "Not substantial" FL exchange [swop/restructure/refinancing] with an existing creditor in the same currency, when applying IFRS. "Not substantial" FL exchange [swop/restructure/refinancing] with an existing creditor in the same currency, when applying ASPE**. Legal defeasance.
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4		Accounting treatment:
5		A: Record (recognize) issuance of new financial liability: increase the balance sheet's (i) cash and (ii) financial liabilities.
6		B: Remove from the balance sheet the carrying value* of the old financial liability (i.e., derecognize the old financial liability).
7		C: Remove from the balance sheet the cash paid to settle the old financial liability.
8		D: Record gain/loss (D = B - C) in the income statement.
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10		* Carrying value = book value = face value less/plus unamortized discount/premium, assuming the financial liability is measured using the amortized cost model.
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12		© Brian Conheady
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