What it is
Whether a debt amendment is a modification or an extinguishment turns on the present value of the cash flows. The test compares the present value of the new debt’s cash flows, with fees, to the present value of the original debt’s remaining cash flows, both at the original effective rate.
The workbook takes the effective rate, payment frequency, fees and period-by-period cash flows, and shows the change against the threshold.
When to use it
- A loan was amended, extended or refinanced with the same lender.
- Auditing management’s analysis.
- Preparing the memo on debt accounting.
What’s inside
- Test tab with rate, periods, fees and cash flow rows
- Result tab with present values and percentage change
- Treatment of call and put features described in the Legend
- Legend tab
Standard cited
This template follows ASC 470-50-40-10, 40-12. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
Which rate is used?
The effective interest rate, for accounting purposes, of the original instrument (470-50-40-12).
What about callable debt?
Run the workbook twice, once assuming exercise and once not, and use the smaller change.
Related templates
- Debt Modifications and Extinguishments Audit Program
- Debt Classification and Covenant Memo (ASC 470)
- Debt Issuance Cost Amortization Schedule (ASC 470 / 835)
- Debt and Interest Rollforward Schedule
Last updated 11/06/2026. All free templates.