USA Closing Costs from seller's POV

[mf1971999]

We are selling our C-Corp as a stock deal to another C-Corp. Sale will close next month. I just received my March legal invoice and it is 100% related to deal preparation.

My first instinct was to capitalize it on the BS to amortize later, but now my sadly foggy memory is making me believe that I'm thinking from the buyer's POV, not mine as the seller. I'm also thinking that if I capitalize it by booking it to AP it will impact the working capital calc and since it's a closing cost (not ongoing operational costs) that doesn't seem correct.

But then I cant think of another option outside of don't book it at all and just have it paid out of the proceeds, but that doesn't seem like it should be right?

Very confused on what should probably be common knowledge for me, but I'd rather ask for help than just guess, as searching online I've found nothing helpful on several dozen pages of search results.

 

[bklynboy]

US GAAP requires closing costs to be expensed as incurred. Guidance states:

Costs to sell are the incremental direct costs to transact a sale, that is, the costs that result directly from and are essential to a sale transaction and that would not have been incurred by the entity had the decision to sell not been made. These costs include, but are not limited to, investment banker fees, outside legal and audit fees and external consulting fees. These costs would not include any portion of the salaries of employees working on the disposal but would include incremental costs of those employees such as travel costs. The costs to sell should be expensed as they are incurred. They should not be capitalized and are presented as part of discontinued operations on the base financial statement.

See ASC 360 which discusses the topic.