·The bonus is aone- pagesummary of the article: “What's a little debt between friends? How to apply accounting rules for related-party transactions” by Ralph M. Pucek, CPA and Glenn E. Richards,...

Related Party transactions have been found to be leading to several accounting failures and
frauds and this necessitates the need for proper reporting and disclosure and which in itself is
a very risky and complicated task. These complexities arise more so in respect of three main
types of related party transactions. These include a case where an owner’s debt is converted
into equity, related party forgiveness of debt and related party forgiveness of other liabilities.
The accounting rules for conversion of owner’s debt to equity and the other related party
transactions are contained in FASB ASC Section 470-50-40, Debt Modifications and
Extinguishments,...