Interest—Imputation of Interest (Subtopic 835-30)
No. 2015-03 April 2015
Interest--Imputation of Interest (Subtopic 835-30)
Simplifying the Presentation of Debt Issuance Costs
An Amendment of the FASB Accounting Standards Codification?
The FASB Accounting Standards Codification? is the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. An Accounting Standards Update is not authoritative; rather, it is a document that communicates how the Accounting Standards Codification is being amended. It also provides other information to help a user of GAAP understand how and why GAAP is changing and when the changes will be effective.
For additional copies of this Accounting Standards Update and information on applicable prices and discount rates contact:
Order Department Financial Accounting Standards Board 401 Merritt 7 PO Box 5116 Norwalk, CT 06856-5116
Please ask for our Product Code No. ASU2015-03.
FINANCIAL ACCOUNTING SERIES (ISSN 0885-9051) is published quarterly by the Financial Accounting Foundation. Periodicals postage paid at Norwalk, CT and at additional mailing offices. The full subscription rate is $242 per year. POSTMASTER: Send address changes to Financial Accounting Standards Board, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116. | No. 410
Copyright ? 2015 by Financial Accounting Foundation. All rights reserved. Content copyrighted by Financial Accounting Foundation may not be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the Financial Accounting Foundation. Financial Accounting Foundation claims no copyright in any portion hereof that constitutes a work of the United States Government.
Accounting Standards Update
No. 2015-03 April 2015
Interest--Imputation of Interest (Subtopic 835-30)
Simplifying the Presentation of Debt Issuance Costs
An Amendment of the FASB Accounting Standards Codification?
Financial Accounting Standards Board
Accounting Standards Update 2015-03
Interest--Imputation of Interest (Subtopic 835-30)
Simplifying the Presentation of Debt Issuance Costs
April 2015
CONTENTS
Page Numbers
Summary ...........................................................................................................1?2 Amendments to the FASB Accounting Standards Codification? .......................3?7 Background Information and Basis for Conclusions ........................................8?11 Amendments to the XBRL Taxonomy .................................................................12
Summary
Why Is the FASB Issuing This Accounting Standards Update (Update) and What Are the Main Provisions?
The Board is issuing this Update as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The objective of the Simplification Initiative is to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements.
The Board received feedback that having different balance sheet presentation requirements for debt issuance costs and debt discount and premium creates unnecessary complexity. Recognizing debt issuance costs as a deferred charge (that is, an asset) also is different from the guidance in International Financial Reporting Standards (IFRS), which requires that transaction costs be deducted from the carrying value of the financial liability and not recorded as separate assets. Additionally, the requirement to recognize debt issuance costs as deferred charges conflicts with the guidance in FASB Concepts Statement No. 6, Elements of Financial Statements, which states that debt issuance costs are similar to debt discounts and in effect reduce the proceeds of borrowing, thereby increasing the effective interest rate. Concepts Statement 6 further states that debt issuance costs cannot be an asset because they provide no future economic benefit.
To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update.
What Are the Transition Requirements and When Will the Amendments Be Effective?
For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.
For all other entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016.
1
Early adoption of the amendments in this Update is permitted for financial statements that have not been previously issued. An entity should apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect of the change on the financial statement line items (that is, debt issuance cost asset and the debt liability).
2
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related download
- chapter 4 nominal and effective interest rates
- ifrs 9 effective interest rate
- what is the difference between effective interest rates
- financial mathematics for actuaries
- ifrs 9 financial instruments pwc
- effective interest rate disclosure
- effective interest rates george brown college
- effective interest rates making sense or cents 5
- lecture 5 understanding interest rates
- interest—imputation of interest subtopic 835 30
Related searches
- total cost of interest calculator
- amount of interest paid calculator
- present value of interest payments
- calculate amount of interest on car loan
- effective rate of interest formula
- annual rate of interest calculator
- fha identity of interest guidelines 4000.1
- identity of interest disclosure
- interest rate of 10 year treasury bond
- example of interest compounded daily
- identity of interest certification form
- effective interest method of amortization