Debt classification in an uncertain economic environment

Every Tuesday in March, Suzanne Stephani, is taking over the podcast to bring you the latest on different types of financing arrangements - from debt to leases to supplier financings - including how the current macroeconomic environment impacts the accounting. 

In this episode, Heather Horn and Suzanne will discuss the impact of the current macroeconomic environment on the classification of debt as current or noncurrent.

In this episode, you’ll hear discussion of:

• 4:44 - Key judgments in assessing the impact of covenant violations when there are grace periods and waivers
• 13:40 - What to think about when debt is modified in advance of a covenant violation
• 17:12 - The importance of identifying cross default and cross acceleration clauses in debt agreements
• 20:08 - What you need to know about subjective acceleration clauses (SACs), especially in the current economic environment  
• 25:38 - Frequent debt refinancing questions and how SACs within refinancing agreements impact the ability to use them to achieve noncurrent classification 

For more information, listen to our previous podcast on the presentation and disclosure of debt, and stayed tuned for our next podcast in this miniseries, on debt restructuring. Also read our Financial statement presentation guide and frequently asked questions on accounting in uncertain times. 

Suzanne Stephani is a director in PwC’s National Office specializing in the statement of cash flows, as well as the application and interpretation of the accounting guidance related to financing and leasing transactions.

Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series. With over 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.

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