REAC Guidance on Debt Issuance Costs

AHACPA continues to receive numerous questions regarding REAC’s position on the implementation of ASU 2015-03 on debt issuance costs. Since the original REAC notice, the guidance has been somewhat neglected. To remind auditors and clients of the guidance, AHACPA wishes to reiterate the following:

  • HUD has indicated the debt issuance costs should be removed from the asset side of the balance sheet and moved to liabilities. Owners have a choice to record the amount directly in account 2320 – First Mortgage Long-term, or in a new account (2340 – Debt Issuance Costs). Usage of that account is voluntary and not required.
  • The amortization will be included in interest expense.
  • Then a new account has been added to the cash flow (S1200-486) to account for the non-cash portion of interest expense.
  • Footnotes should indicate the project has adopted a new accounting pronouncement and the other related footnotes are changed to account of the changes overall.
  • The information contained on this site is designed to provide accurate information in regard to the subject matter covered. However, this site is not a substitute for the promulgated standards or regulatory guidance. The information is provided with the understanding that AHACPA is not engaged in rendering legal, accounting, or other professional advice. If such advice is required, the services of a competent professional should be secured.