I have a question regarding decreases and increases on demand lines of credit. I have a demand line of credit that originated in 2008 for $900k (reported for 2008). In 2009 it was decreased to $500k (not reported in 2009). In 2010 it was increased to $1 million. Should I report the amount of the increase as $500k or as $100k? I'm not sure if the increase amount should be based off the previous credit limit or the original credit limit.

Sano, has the maturity date been extended?

There must be a note or notes for the LOC advances. If the amount of the LOC is changing it would appear that a new note would have to be issued and the original note paid off. If so, this would qualify as a refinance and not a renewal. This would apply if you replace an original demand note with another demand note. But if you use the original note and merely forbear from making demand it would not count as either a refinance or a renewal. Exactly what are you doing with the debt instrument?

I just recently observed a process where the original demand note never changed; the bank raised and lowered the amount available via a letter. We decided there is nothing to report in that case.

If a new note was created, that would be reported.

Since it is a demand, there is no hard maturity date to extend. What was done was an amendment/modification to the note stating that the "Promise to Pay" section of the note is hereby amended and restated to read the following "the borrower promises to pay the lender, on demand, the new principal amount of .....". The guidance shows that an increase to the principal can be reported, it just doesn't say which amount the increase should be taken from.

It would be from the last principal amount, whether in the note or the latest modification prior to the new modification.