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Topic: Defrerred Fees (Loans) (

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lostdark
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Joined: 19 Jul 2012
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Posts: 2

Posted: 19 Jul 2012 at 18:08 \| IP Logged

Hi Everyone,

I understand fees (for example, origination) have to be amortized per
FAS 91. However, what happens when the debtor lets say pays down
60% of the loan in year 5 (10 year loan) instead of the whole thing in year
10. Does that change the amortization schedule? To me, it would not make
sense to keep amortizing at the same amount if the loan principle is less.

I would assume there is much more P&L in year 5?

astone
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Joined: 23 Mar 2011
Location: United States
Online Status: Offline
Posts: 91

Posted: 26 Jul 2012 at 21:32 \| IP Logged

In the case of bonds and amortization of bond issue costs. The issue cost are

capitalized and amortized over the life of the bonds (per GAAP not IFRS). When

a portion of the bonds are retired early the % of the unamortized costs are

written off and expensed to the P&L.

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