![]() ![]() ![]() In addition, it converges the guidance in U.S. Under current guidance (i.e., ASC 835-30-45-3 2 before the ASU), an entity reports debt issuance costs in the balance sheet as deferred charges (i.e., as an asset).Įditor’s Note: Requiring presentation of debt issuance costs as a direct reduction of the related debt liability (rather than as an asset) is consistent with the presentation of debt discounts under U.S. Simplification projects are narrow in scope, involve limited changes to U.S. GAAP by reducing costs and complexity while maintaining or enhancing the usefulness of the related financial statement information. Launched in June 2014, the initiative is intended to improve U.S. The project on debt issuance cost presentation is part of the FASB’s simplification initiative. At the June 18, 2015, meeting of the FASB’s Emerging Issues Task Force (EITF), the SEC staff announced that it would not object to an entity’s deferral and presentation of such costs as an asset (see discussion below). Since the ASU’s issuance, practitioners have inquired about the appropriate balance sheet presentation of costs incurred in connection with revolving-debt arrangements. Amortization of the costs is reported as interest expense. ![]() Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. On April 7, 2015, the FASB issued ASU 2015-03, 1 which changes the presentation of debt issuance costs in financial statements. It contains updates that reflect subsequent discussions with the SEC and FASB staffs related to the accounting for costs associated with revolving-debt arrangements. This Heads Up supersedes our April 7, 2015, Heads Up on the presentation of debt issuance costs. By Magnus Orrell and Mathew Lorie, Deloitte & Touche LLP ![]()
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