Question
If a creditor has an investment in a loan that has been impaired and written down, what options would the creditor have in accounting for
If a creditor has an investment in a loan that has been impaired and written down, what options would the creditor have in accounting for the carrying value of the investment if it became no longer impaired? What would the accounting treatment be under U. S. GAAP?
A) Even though the loan could return back to the current status if the credit quality improves (through payment or an increase in fair value), the creditor cannot write the loan balance upward.
B) No revaluation recognition would be recorded whether or not impaired.
C) A creditor can revalue the carrying amount of the investment in the loan after a write-down, up to the original carrying amount if an improvement in credit quality occurs.
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