Is FAS 13 still in effect?
The FASB’s ASU 2016-02, Leases, was issued on February 25, 2016. 13 (FAS 13, ASC 842 under FASB’s new coding structure), which has been amended several times. While new lease standard brings nearly all leases onto the balance sheet, debt metrics remain unaffected.
What qualifies as a debt issuance cost?
Debt issuance fees refer to expenses that the government or public companies incur in selling bonds. The expenses include registration fees, legal fees, printing costs, underwriting costs, etc. The costs are paid to law firms, auditors, financial markets regulators.
Where should a discount or premium appear in the financial statements What about issue costs?
balance sheet
Therefore, the discount or premium shall be reported in the balance sheet as a direct deduction from or addition to the face amount of the note. Similarly, debt issuance costs related to a note shall be reported in the balance sheet as a direct deduction from the face amount of that note.
What is an ASC 310?
ASC 310 comprises four Subtopics (Overall, Nonrefundable Fees and Other Costs, Loans and Debt Securities Acquired with Deteriorated Credit Quality, and Troubled Debt Restructurings by Creditors).
What replaced FAS 13?
The concept of “executory costs,” which were excluded from capitalization under FAS 13, has been replaced by “nonlease components,” which are payments due as part of a lease agreement which reflect goods or services separate from the asset.
What FAS 13?
FAS 13: Accounting for Leases. INTRODUCTION. 1. This Statement establishes standards of financial accounting and reporting for leases by lessees and lessors.
How are debt issuance costs treated?
Under the new rules debt issuance costs are deducted from the outstanding balance of the obligation. Additionally, amortization of these costs is charged to interest expense. The effect of these changes is a higher imputed interest rate—which is one of the new items to be disclosed in the financial statements.
How do you record bond issue price?
The costs associated with issuing bonds should be recorded in a contra liability account such as Bond Issue Costs. Over the life of the bonds you will need to systematically move the bond issue cost from the balance sheet to the income statement. Accountants refer to this as amortizing the costs.
How should discount on bonds payable be reported on the financial statements premium on bonds payable?
Discount (premium) on bonds payable should be reported in the balance sheet as a direct deduction from (addition to) the face amount of the bond.
What FAS 114?
Creditors for Impairment of a Loan
114 (FAS 114), “Accounting by Creditors for Impairment of a Loan.” Under FAS 114, a loan is impaired when it is probable that the bank will be unable to collect all amounts due (including both interest and principal) according to the contractual terms of the loan agreement.
When do bond issue costs go to expense?
The full period over which bond issue costs should be charged to expense is from the date of bond issuance to the bond maturity date. If a bond issuance is paid off early, then any remaining bond issuance costs that are still capitalized at that time should be charged to expense when the remaining bonds are retired.
How does ABC account for bond issue costs?
The bonds will be retired in 10 years. Accordingly, ABC initially capitalizes the bond issue costs, with a debit to the bond issuance costs account and a credit to the cash account. Later, it charges $5,000 to expense in each of the next 10 years, with a debit to the bond issuance expense account and a credit to the bond issuance costs account.
Which is an example of bond issuance costs immaterial?
An alternative treatment when bond issuance costs are immaterial is to charge them to expense as incurred. Example of Bond Issuance Costs For example, ABC International incurs $50,000 to issue bonds. The bonds will be retired in 10 years.
Are there accounting standards for debt issuance costs?
The FASB Accounting Standards Codification (ASC), interestingly, does not define “debt issuance costs”, although the FASB issued two Accounting Standards Updates (ASUs) in 2015 related to presentation of debt issuance costs, with effective dates for nonpublic companies for financial statements covering fiscal years ended in December 2016 or later.