What Is Debt Extinguishment

debt extinguishment. noun [ C or U ] ACCOUNTING. the fact of removing a debt from a company’s financial records because it has been paid back or no longer exists: a debt extinguishment profit/loss The conversion of the debentures to Series A Stock resulted in a debt extinguishment loss of $1,048,000.

What is gain on extinguishment of debt?

Gain or loss on extinguishment of debt is the difference between fair value and the carrying amount of debt on the date it paid off. … Due to other reasons, issuer decides to extinguish the debt, the gain or loss must be recognized immediately into income statement.

What extinguishment means?

1 : to cause the nonexistence of : do away with. 2 : to cause (as a claim or right) to be void : nullify. 3 : to get rid of (a debt or other liability) by payment or other compensatory adjustment.