Third party fees for structuring a loan

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A company paid an independente third party a fee for structuring a loan (1% of the total loan), this entity is different from the bank that originates the loan. The loan is used to fund a construction proyect. Is the fee allowed to be deferred/capitalized or expense??
please provide the tecnical reference when you answer.
 
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Fidget

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What are your thoughts on it, and which accounting standards do you think might be in play here?
 

kirby

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The fee is to be capitalized and amortized over the term of the loan using the interest method.
 
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The FASB originally addressed this in paragraphs 235 to 239 of FASB Concept Statement No. 6, which indicates that the costs are a reduction of the liability (technically not an asset--the debit is offset against the liability). The FASB codification is largely silent on it; however, ASC 340-10-S99 references the SEC's position that debt issuance costs should be treated as a reduction of the liability and amortized over the life of the debt to which they relate.

Hope that helps.
 

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