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optimistCPA
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Posted: 23 Aug 2009 at 23:16 | IP Logged  

What is the difference between direct out of pocket
expenses (which are debited) (as in case of investment in
sub.) and Bond issue costs (which are capitalized)?

I thought bond issue costs are also legal fees etc. Then if
that is true then which one is capitalized and which one is
expensed.

Thanks always.

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Jams
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Posted: 23 Aug 2009 at 23:39 | IP Logged  

i think direct issue costs are expensed now in new rule of 141R and not increase to investment account. direct cost have the same meaning only treatment is different for debt and equity. for debt they are capitalize and amortize over the life of bond, and for equity they are expensed (used to increase investment earlier). and of course the registration costs rules are not changed which is-they still reduce "APIC". 

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optimistCPA
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Posted: 23 Aug 2009 at 23:51 | IP Logged  

So, direct expenses related to equity are expensed and
exps. related to debt are capitalized.

Thanks Jams.

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Jams
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Posted: 24 Aug 2009 at 09:06 | IP Logged  

yep. but only for the new rules, not for the old ones, old rule says "add to investment account". in case the exam has some old questions. good luck. 

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bird
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Posted: 24 Aug 2009 at 10:52 | IP Logged  

bond issue costs will most likley be specifically identified in the question.

It seems like the examiners want to make sure you know the treatment of bic more than anything else.

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