What are the general rules for measuring gain or loss by both creditor and debtor in a troubled-debt restructuring involving a settlement?

A troubled-debt restructuring occurs when a creditor allows the debtor causes of financial troubles adjustments that it would not have otherwise regarded. A troubled debt restructuring comprises either settlement of debt at a value lower than its carrying value or prolongation of debt with an alteration.

A debt obligation in a troubled debt restructuring is settled by transferring receivables or by issuing the debtor's stock. In these circumstances, the non-cash assets should be responsible for at fair value. The debtor identifies again that it is equivalent to the value of the surplus, and the creditor generally would exact the loss against the allowance for bad debts accounts. Moreover, the debtor identifies a surplus (gain) or deficit (loss) on the settlement of assets so that the actual value of those assets is different from their book value.