What is Consolidated Funded Debt? A Comprehensive Legal Overview
Definition & Meaning
The term consolidated funded debt refers to the total amount of debt that a corporation and its consolidated subsidiaries owe, after removing any intercompany transactions. This total is calculated according to generally accepted accounting principles (GAAP). Essentially, it represents the aggregate of all long-term financial obligations that a corporation has, providing a clear picture of its financial health.
Legal Use & context
Consolidated funded debt is primarily used in corporate finance and accounting. It is relevant in various legal contexts, including mergers and acquisitions, corporate restructuring, and financial reporting. Understanding this term is crucial for stakeholders such as investors, creditors, and regulatory bodies, as it impacts financial assessments and decisions. Users can manage related documentation and processes with the help of legal templates available through US Legal Forms.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A corporation, ABC Inc., has total outstanding bonds of $1 million and loans of $500,000. If it also has $200,000 in loans from its subsidiary, the consolidated funded debt would be calculated as follows: $1 million + $500,000 - $200,000 = $1.3 million.
Example 2: XYZ Corp. merges with another company and needs to report its consolidated funded debt, which includes all debts from both entities, minus any debts owed between them. (hypothetical example)