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Bond Indebtedness, Troubled Debt, Impairment and Concession

# 1
Why would a company want to reduce its bond indebtedness before its bonds reach maturity? Indicate how this can be done and the correct accounting treatment for such a transaction.

# 2
a. In a troubled debt situation, why might the creditor grant concessions to the debtor?
b. What type of concessions might a creditor grant the debtor in a troubled debt situation?
c. What is meant by "impairment" of a loan? Under what circumstances should a creditor or debtor recognize an impaired loan?

Solution Summary

Explinations and reasons why companies reduce bond indebtedness before its maturity, ways a company can retire bonds, why might the creditor grant concessions to the debtor all of importance in providing creditor and debtor latitude.