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Deferred financing costs or debt issuance costs is an accounting concept meaning costs associated with issuing debt (loans and bonds), such as various fees and commissions paid to investment banks, law firms, auditors, regulators, and so on. Since these payments generate future benefits, they are treated as an asset. The costs are capitalized, reflected in the balance sheet as an asset, and amortized over the finite life of the underlying debt instrument. The unamortized amounts are included in other assets in the accompanying consolidated balance sheets. Early debt repayment results in expensing these costs.
Tax Treatment For U.S. federal income tax purposes, DFC are generally amortized over the life of the debt using the straight-line method.
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