298 Government Finance Statistics Manual 2014
Figure A3.1 Decision Tree for the Statistical Treatment of Debt Assumption(^1) An “effective fi nancial claim” is understood to be a claim that is supported by a contract between the new debtor and the original
debtor, or (especially in the case of governments) an agreement, with a reasonable expectation to be honored, that the original debtor will
reimburse the new debtor.
Does the new
debtor (assumer)
obtain an effective
financial claim^1
on the
original debtor?
Is the value of
this claim on the
original debtor
equal to the
present value of
the amount
expected to
be received by
the new debtor
(assumer)?
Is the original
debtor a
going
concern?
Yes No
The debt assumer
records an increase
in debt liabilities
to the original
creditor, and
an increase in
financial assets
(e.g., loans) with
the original debtor as
the counterparty.
● The debt assumer records
an expense in the
form of a capital
transfer/grant to the
original debtor for the
difference between the
liability incurred and the
financial asset acquired;
and
● The debt assumer records
an increase in debt
liabilities to the original
creditor, and an increase
in financial assets
(e.g., loans) with the original
debtor as the counterparty.
Is the original
debtor a public
corporation?
The debt assumer
records an
expense in the
form of a
capital transfer/
grant to the
original debtor.
Yes
Yes
No
No
No
The debt assumer
records an increase
in financial
assets in the form
of equity owned in
the public corporation.
Yes