IAS 32 - Incremental Costs on Issuing Equity

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rosyiv
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IAS 32 - Incremental Costs on Issuing Equity

Post by rosyiv »

Per IAS 32(37) - "An entity typically incurs various costs in issuing or acquiring its own equity instruments. Those costs might include registration and other regulatory fees
amounts paid to legal, accounting and other professional advisers, printing costs and stamp duties. The transaction costs of an equity transaction are accounted
for as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.
The costs of an equity transaction that is abandoned are recognized as an expense."

Our entity recently filed for an increase in authorized capital stock. We are required to pay fees to SEC as part of the application process.

Can the regulatory fee paid for the increase in authorized capital stock be treated as a reduction from existing APIC?

Thanks
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Marek Muc
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Re: IAS 32 - Incremental Costs on Issuing Equity

Post by Marek Muc »

we've had a similar discussion, have a read:

viewtopic.php?f=4&t=302
JRSB
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Re: IAS 32 - Incremental Costs on Issuing Equity

Post by JRSB »

you apply IFRS in your US company?
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Marek Muc
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Re: IAS 32 - Incremental Costs on Issuing Equity

Post by Marek Muc »

how did you infer that this was a US company? ;)
JRSB
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Re: IAS 32 - Incremental Costs on Issuing Equity

Post by JRSB »

maybe its not - but now I'd like to know!
rosyiv
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Re: IAS 32 - Incremental Costs on Issuing Equity

Post by rosyiv »

Not a US company ;) We do apply IFRS.

My concern is -

In this case, there is no actual equity issuance per se since the fee is only for the increase in "authorized capital stock". As such this may be viewed as direct to P&L.

On the other hand, these are costs which are unavoidable and a prerequisite to eventually issue stocks. With this view, it can be argued that the fee may be deducted from equity/APIC.

Would like to hear your thoughts!
JRSB
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Re: IAS 32 - Incremental Costs on Issuing Equity

Post by JRSB »

Doesn't seem incremental to a specific share issue so will follow the argument in the old thread
rosyiv
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Re: IAS 32 - Incremental Costs on Issuing Equity

Post by rosyiv »

Got it. Thank you! :)
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