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We need to pay a debt prepayment cost associated with refinancing debt to a lower interest rate with a different counterparty. The prepayment cost is directly impacted and increased as a result of lower interest rates. The prepayment cost would not be incurred if it we were not refinancing.
If a prepayment fee is incurred in order to refinance debt at a lower rate, can the prepayment fee be treated as a financing fee and deferred over the life of the new debt? Thought being that the prepayment fee was only incurred to obtain new lower rates. ASU 2016-15 requires prepayment fees to be presented as a financing cash flow and some task force members believe that these costs are similar to debt issue costs.
If a prepayment fee is incurred in order to refinance debt at a lower rate, can the prepayment fee be treated as a financing fee and deferred over the life of the new debt? Thought being that the prepayment fee was only incurred to obtain new lower rates. ASU 2016-15 requires prepayment fees to be presented as a financing cash flow and some task force members believe that these costs are similar to debt issue costs.