USA Accounting for termination fees for early prepayment of debt

[pharman10]

Hi can anyone help me with this question? I've searched for answers everywhere but can't find any...

We took out a 3 year loan but are repaying it early because we have found a cheaper loan to replace it. The bank is charging us a 1% penalty for the early repayment.

My question is whether I have to expense the 1% fee immediately or whether I can defer it and amortize as interest expense over the term of the new loan.

Thanks!

 

[pharman10]

I should add that these were loans to purchase fixed assets

 

[Triest123]

Hi can anyone help me with this question? I've searched for answers everywhere but can't find any...

We took out a 3 year loan but are repaying it early because we have found a cheaper loan to replace it. The bank is charging us a 1% penalty for the early repayment.

My question is whether I have to expense the 1% fee immediately or whether I can defer it and amortize as interest expense over the term of the new loan.

Thanks!

The penalty payment should be expensed immediately as it is related to the old loan
which has been fully repaid.