How does Beef O Bradys amortize debt issuance costs?
Beef_O_Bradys Franchise · 2025 FDDAnswer from 2025 FDD Document
All costs incurred to secure financing arrangements, as described in Notes 9 and 10, have been deferred and are being amortized, to interest expense, over the term of the related agreement. The Company uses the straight-line method for amortizing the debt issuance costs, which approximates the effective interest method. In accordance with ASC 835, debt issuance costs relating to notes payable are recorded as a reduction of the note liability and debt issuance costs relating to the revolving credit facility are included with other assets in the accompanying consolidated balance sheets. Debt issuance costs are expensed in full upon the extinguishment of the related debt.
Source: Item 23 — RECEIPTS. (FDD pages 66–330)
What This Means (2025 FDD)
According to Beef O Bradys's 2025 Franchise Disclosure Document, the company defers all costs incurred to secure financing arrangements and amortizes them to interest expense over the term of the related agreement. Beef O Bradys uses the straight-line method for amortizing these debt issuance costs, which approximates the effective interest method.
For notes payable, debt issuance costs are recorded as a reduction of the note liability. For the revolving credit facility, these costs are included with other assets on the consolidated balance sheets. This means that the initial cost of securing debt is not immediately expensed but is spread out over the life of the loan, providing a more accurate picture of the company's financial performance over time.
Furthermore, Beef O Bradys expenses debt issuance costs in full upon the extinguishment of the related debt. This indicates that if a debt agreement is terminated early, any remaining unamortized costs are immediately recognized as an expense. This accounting treatment aligns with standard practices, ensuring that financial statements accurately reflect the costs associated with debt financing and its termination.