Bond Issue Costs
Bond issue costs or debt issue costs refer to all the costs incurred in issuing bonds such as underwriting charges, printing costs, professional and registration fees. These costs are initially capitalized and then charged to interest expense over the life of the bond.
The bond issuance costs are recorded as a deduction from the bond liability on the statement of financial position. These costs are then charged to profit and loss statement as expense over the life of the bond. Using the amortization method, the bond issuance costs are charged as expense to statement of comprehensive income by the same amount in each period over the life of the bond till its maturity. The period over which the issuance costs are charged as expense is from the bond issuance date to the date of maturity of the bond.