Briggs and Stratton recently issued debt with issue costs of $5.1 million. How should the costs of issuing these bonds be accounted for and classified in the financial statements?
Bond issuance costs should be recorded as a reduction to the issue amount and then amortized into expense over the life of the bond. A deferred charge account is set up for Unamortized Bond Issue Costs and amortized over the life of the issue, separately from but in a manner similar to that used for a discount on bonds.
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