Loan Origination Fee Gaap. Costs directly related to evaluating the financial performance of the potential borrower. GAAP in general lacks accounting guidance for for-profit entities with respect to government grants.
However a 100000 loan with 4000 of fees will negatively impact the profit for a small business as reported on the interim financial statement. A recent update to Generally Accepted Accounting Principles has modified the accounting treatment of such costs. The accounting standard ASC 310-20 requires the deferral of all loan origination fees and costs and the application of this accounting standard is straightforward.
There is essentially no guidance in the Financial Accounting Standards Board FASB Accounting Standards Codification ASC that exactly fits the terms and conditions of the PPP loans.
The lender charges fees of 3000 and incurs 2000 of related costs. Loan origination costs can be harder to determine. Generally Accepted Accounting Principles US. The loan fees are amortized through Interest expense in a Companys income statement over the period of the related debt agreement.