Debt Issuance Costs
On April 7th, 2015, the Financial Accounting Standards Board (FASB) unveiled new accounting standards updates. One notable update is the modification to debt issuance costs. This new accounting treatment, as part of the Board’s Simplification Initiative, is aimed at reducing costs and complexities and improving the usefulness of information provided to financial statement users.
This particular update will present debt issuance costs as direct deductions from corresponding recognized debt liabilities, meaning that the cost of issuing debt will no longer be recorded as a deferred charge (an asset) and will be treated more along the lines of debt discounts — a net effect against the overall debt liability on the balance sheet.
One caveat: A separate asset will need to be recorded for debt issuance costs if incurred before receipt of the debt funding. This update is effective for all entities with fiscal year-ends beginning after December 15, 2015.