How does Management Recruiters amortize debt issuance costs?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
in substance, multiple awards. The grant date fair value of stock awards is based on the quoted price of our common stock on the grant date. The grant date fair value of option awards is determined using the Black-Scholes valuation model.
Debt Issuance Costs
Debt issuance costs associated with our revolving line of credit is capitalized and presented as prepaid expenses, deposits, and other assets. Because debt issuance costs are related to a line of credit, they are presented as an asset, rather than a
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 65–66)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, debt issuance costs associated with their revolving line of credit are initially capitalized and recorded as prepaid expenses, deposits, and other assets, rather than being treated as a reduction of debt. This is because the costs are directly related to the line of credit itself.
Management Recruiters amortizes these debt issuance costs using the straight-line method. This means the cost is evenly spread out over the term of the agreement related to the debt.
For example, capitalized debt issuance costs were approximately $109,000 as of December 31, 2023, and $334,000 as of December 31, 2022. This accounting treatment provides a consistent and predictable expense recognition over the life of the debt agreement.