In 2022, company A issued public debt and incurred £2k transaction cost. The transaction cost of £2k was recognized on the balance sheet, and then expense over the life of the debt.
How do you treat ongoing transaction costs (eg. A yearly debt listing fee)? My gut feeling is that we expense ongoing transaction cost.. is this right? Thanks
Treatment of debt issuance costs
Re: Treatment of debt issuance costs
Given it's a yearly fee, yes those costs will naturally 'amortise' over the correct life so yes as incurred.
Re: Treatment of debt issuance costs
So, I don't capitalise it and amortized over the life of the debt given it's a yearly fee? But instead expense as incurred
Re: Treatment of debt issuance costs
If you did that you'd have higher P&L in the earlier years than the later, which is the opposite of what the standards are trying to do.
Re: Treatment of debt issuance costs
So, every year after the debt issuance, we still capitalise the yearly debt listing fee and amortized this over the life of the debt?
Re: Treatment of debt issuance costs
No expense it
Re: Treatment of debt issuance costs
this is debt?