Resource Modified: 07/07/2017
In April of 2015 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2015-03 (ASU 2015-03). ASU 2015-03 changes the way debt issuance costs are reported. Debt issuance costs, prior to this notice, were reported on the balance sheet as assets and amortized over the life of the loan(s). ASU 2015-03 requires these costs to be reported on the liability side of the balance sheet as a discount to the debt. Amortization of the discount will be reported as interest expense. ASU 2015-03 is effective for financial statements with fiscal years beginning after December 15, 2015.
The REAC FASS-FHA team is modifying the FASSUB system to align it with ASU 2015-03. FASS-FHA staff received invaluable assistance from industry experts in deciding what changes needed to be made to the current chart of accounts. After carefully weighing input from several sources we decided to offer two different financial reporting options:
Using the first approach submitters will remove debt issuance costs from the asset side of the balance sheet and will transfer them to the liabilities side of the balance sheet by discounting the principal balance of each debt obligation to which the costs apply. In the second approach submitters will remove the costs from the asset side of the balance sheet and transfer the entire balance to a new account on the liabilities side of the balance sheet entitled Debt Issuance Costs. The Debt Issuance Costs account will then be subtracted from debt obligations to arrive at total long-term liabilities. Both approaches will require submitters to amortize these costs as an increase in interest expense on the statement of operations.
Several changes will be made to the current chart of accounts including the following:
These account changes will be implemented in the evening of October 6. Specific account changes can be viewed in this document. Changes are shown in red.
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