Entities have new guidance about how to account for debt issuance cost in their financial statements. The Financial Accounting Standards Board (FASB) recently released an accounting standards update (ASU) that requires debt issuance be presented as a direct deduction from the carrying amount of the debt instead of as a noncurrent asset.
The change, made as part of the FASB’s Simplification Initiative, brings requirements into line with those of premiums and discounts on debt. ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs makes ASC Subtopic 835-30 consistent with International Financial Reporting Standards, (IFRS), which also presents debt issuance costs as deduction from the carrying amount of the debt.
More details about ASU 2015-03 are available in this MHM Messenger: Presentation of Debt Issuance Cost Simplified.