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Hello
In the answer, there is the following paragraph:“The fees payable in transaction costs are not deemed to be part of the consideration paid to the seller of the shares. They are not assets of the purchased business that are recognised on acquisition. Therefore, they should be expensed as incurred and the services received. Transaction costs relating to the issue of debt or equity, if they are directly attributable, will not be expensed but deducted from debt or equity on initial recognition.”
Can you please give an example of transaction costs relating to the issue of debt or equity and the double entry?
Hi,
If we issue debt and the costs are directly attributable then we deduct the costs from the financial liability.
DR Financial liability
CR BankIf we issue shares and the costs are directly attributable then we can put the costs through share premium.
DR Share premium
CR BankHope this helps.
Thanks
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