Alternative methods - reporting early extinguishment of debt

Gains or losses from the early extinguishment of debt that is refunded can theoretically be accounted for in three ways:

1. Amortized over the life of old debt.

2. Amortized over the life of the new debt issue.

3. Recognized in the period of extinguishment.

Discuss the supporting arguments for each of the three theoretical methods of accounting for gains and losses from the early extinguishment of debt.

Solution Summary

Response is 264 words in everyday language suitable for novice to intermediate.