Third party fees for structuring a loan

[accountant10]

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.

 

[Fidget]

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

 

[kirby]

The fee is to be capitalized and amortized over the term of the loan using the interest method.

 

[cmesh]

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.