How Should the Cost of Issuing Debt in an Acquisition

question 4

Multiple Choice

How should the cost of issuing debt in an acquisition be recognized?

• A)Expensed
• B)Amortized over the term of the debt
• C)Deducted from the value of the debt
• D)Deducted from shareholders' equity

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Definitions:

Increases Amount

Refers to the act of raising the quantity or value of something.

Liable

Legally responsible or obligated.

Co-signs

Agrees to be equally responsible for the repayment of a loan or obligation, typically to help another person obtain credit.

Primarily Liable

The main or foremost obligation or responsibility to fulfill a debt or legal duty.