Question

with regard to a business combination, how does a treatment of costs related to issuance and registration fees of securities differ from the treatment of other costs related to the transaction?

Answer 1

Business combination related costs include not only both direct and indirect combination costs but also costs related to registering and issuing securities. The direct costs include fee paid for business combination related services provided by professional like attorneys, accountants and investment bankers etc. The indirect business combination costs include the costs allocated within the organization for secretarial and managerial time spent on the project. The above direct and indirect business combination costs are expensed as incurred in the period in which they are incurred and the costs related to issuance and registration of securities are reduced from value of fair value of securities issued in the form of a debit to additional paid-in capital.