Headquartered in Montreal, Canada, Valeant Pharmaceuticals International is a multinational company that develops and markets prescription and...

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Accounting

Headquartered in Montreal, Canada, Valeant PharmaceuticalsInternational is a multinational company that develops and marketsprescription and non-prescription products in dermatology andneurology. The company is listed both on the NYSE and Toronto StockExchange. Its 2015 Income Statement reported the following lineitem.
$Millions 2015 2014 2013
Loss of Extinguishment debt------------------ $20.0 $129.6$65.0
a) What is a ‘Loss of extinguishment of debt’? When does such aloss occur?
b) How is this loss calculated?
c) How does this loss impact the financial statements?
d) Why might management want to retire this debt early, even ifit was at a loss?

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1 First of all extinguishment of debt refers to writing off debt from the financial statements Debt needs to be written off in case of early payment of debt or prepayment of debt Therefore loss on extinguishment on debt arise when there is prepayment of debt 2 Calculation of loss on extinguishment of debt It is See Answer

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