TDR_20240318

	A	B	C	D	E	F	G	H
1		Debtor's name				INSTRUCTIONS
2		Creditor's name				1) Delete the default data in the yellow-shaded cells and enter your own data. 2) Then click RECALCULATE on the toolbar at the top of this screen to update all screens. 3) This application uses your data when explaining (i) how the borrower accounts for, and (ii) the differences between, a 'substantial' and a 'non-substantial' financial liability exchange between the borrower and an existing lender, and as defined by IFRS 9 and Canadian ASPE 3856.
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4		Old financial liability
5		Face value
6		Issued January 1,
7		Stated rate per annum
8		Term (years)
9		Semi-annual Yield
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11		Replacement financing arrangement
12		Face value
13		Issued December 31,
14		Stated rate per annum
15		Term (years)
16		Semi-annual Yield
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18	This is a textual version of the scenario provided by the yellow-shaded cells above. It describes an exchange of debt instruments between a borrower (Debtor Limited) and an existing lender (Creditor Bank).
19	On January 1, 2022 Debtor Limited issued a 5 year 8.00% $900,000 bond payable to Creditor Bank. Interest payment dates are June 30 and December 31 and the bonds were issued to provide a semi-annual yield of 3.00%. By December 2025 Debtor Limited is in financial difficulties and is about to miss the December 31, 2025 interest payment. Debtor Limited negotiates an arrangement with Creditor Bank whereby Creditor Bank agrees to waive the December 31, 2025 interest payment and to replace, effective December 31, 2025, the above bond with a 8 year $1,050,000 face value bond bearing 10.00% annual interest, payable semi-annually. Due to Debtor Limited's precarious situation, lenders would normally seek a semi-annual return of 7.00% on this 'bail-out' financing.
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24	References in this learning-application to the CPA Canada Handbook - Accounting are included with permission from Chartered Professional Accountants of Canada.
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