An organization may incur a number of costs when it issues debt to investors. For example, when bonds are issued, the issuer will incur accounting, legal, and underwriting costs to do so. The proper accounting for these debt issuance costs is to initially recognize them as an asset, and then charge them to expense over the life of the bonds.
2. Summary of Significant Accounting Policies Basis of Presentation. The unaudited consolidated financial statements include all of the accounts of the Company and the Operating Partnership as of September 30, 2011, presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. Costs that are capitalized are recorded as assets rather than expenses that reduce income for the accounting period. U.S. accounting guidelines known as generally accepted accounting principles, or GAAP, permit businesses to capitalize certain costs related to intangible assets, such as patents, copyrights, trademarks and goodwill.
Typical examples of corporate capitalized costs are expenses associated with constructing a fixed asset and can include materials, sales taxes, labor, transportation, and interest incurred to ... The tax treatment of costs capitalized under Regs. Sec. 1.263(a)-5 depends on whether the acquirer or the seller incurs the costs in the transaction, whether the acquisition is an asset acquisition or a stock acquisition, and whether the transaction is taxable or tax free.
Deferred Acquisition Costs (DAC) represents the “un-recovered investment” in the policies issued and are therefore capitalized as an intangible asset to match costs with related revenues. Over time the acquisition costs are recognized as an expense that reduces the DAC asset. Startup costs do not include costs for interest, taxes, and research and experimentation (Sec. 195(c)(1)). Once a taxpayer decides to acquire a particular business, the costs to acquire it are not startup costs (Rev. Rul. 99-23), and the taxpayer must capitalize the acquisition costs (Sec. 263(a) and INDOPCO, Inc., 503 U.S. 79 (1992)). The tax treatment of costs capitalized under Regs. Sec. 1.263(a)-5 depends on whether the acquirer or the seller incurs the costs in the transaction, whether the acquisition is an asset acquisition or a stock acquisition, and whether the transaction is taxable or tax free. Accounting for costs to obtain and fulfill a contract under the new revenue standard will require judgment. If these costs are capitalized, determining the method and period to amortize them over will also require judgment. Roxanne Fattahi discusses when to capitalize and whether the practical expedient could apply. Demolition costs incurred in conjunction with the acquisition of real estate may be capitalized as part of the cost of the acquisition if the demolition (a) is contemplated as part of the acquisition and (b) occurs within a reasonable period of time after the acquisition, or is delayed, but the delay is beyond the entity’s control (e.g ...