Where is the amortization of debt issuance costs reported in Dryject's financial statements?

According to Dryject's 2025 Franchise Disclosure Document, the company has adopted FASB ASC 835-30, which dictates that debt issuance costs should be presented as a reduction of the carrying amount of the debt rather than as an asset. Consequently, the amortization of these debt issuance costs is reported as interest expense in the statement of income and member's capital. This means that instead of showing debt issuance costs as an asset on the balance sheet and gradually expensing them, Dryject reduces the debt's value directly and recognizes the amortization as an interest expense over the life of the debt.

For a prospective Dryject franchisee, this accounting treatment affects how the company's profitability is viewed. By including the amortization of debt issuance costs as part of interest expense, Dryject's operating income might appear higher than if these costs were amortized separately. However, net income would reflect the true cost of borrowing, as interest expense (including the amortization) reduces the final profit figure.

It's important for franchisees to understand this accounting method because it provides a more transparent view of the company's borrowing costs. When reviewing Dryject's financial statements, potential franchisees should pay close attention to the interest expense line item in the statement of income and member's capital to fully understand the impact of debt financing on the company's profitability. This approach ensures that all costs associated with debt are accounted for in a straightforward manner, aiding in a more accurate assessment of the company's financial health.