Types, Advantages, and Disadvantages, What Is A Bank Guarantee? Although the concepts and examples explained below focus on the accounting for various fees charged by a lender, the same principles apply to fees paid by a borrower in terms of which fees are to be included as part of the effective interest rate and which are required to be expensed. The Borrower acknowledges that the fee payable hereunder is a bona fide commitment fee and is intended as reasonable compensation to the Lenders for committing to make funds available to the Borrower as described herein and for no other purposes. If you would like to change your settings or withdraw consent at any time, the link to do so is in our privacy policy accessible from our home page.. The practice of many banks is to immediately recognize loan origination fees and costs directly to income and expense at the time of loan origination. #5. This standard dictates those assets recognition, subsequent, and other treatments. This Statement addresses the recognition and the balance sheet classification of nonrefundable fees and costs associated with lending activities. Under IAS 23, these include the following. This content is copyright protected. As of 2020, if the debt is refinanced or repaid before maturity, whats the treatment of the previous financing fee that have been amortized over the period? If those other Standards (e.g. Paragraphs 8-10 of Statement 91 address the accounting for loan commitment fees and costs. Commitment Reimbursement Imprest Fund Payee Supplier, Contractor or Consultant Commercial Bank Borrower / EA / Borrower / EA / Auditor "Borrower" Imprest Account 137 149 (FAS 149), the notional amount of a derivative loan commitment is the maximum amount of the The commitment fee shall be payable to each Lender . BDO is the brand name for the BDO network and for each of the BDO member firms. Banks often give companies a 'credit facility'. For (4) Get instant access to video lessons taught by experienced investment bankers. Lender has executed and delivered a fully executed copy of this Amendment to Borrower. Each BDO member firm in Australia is a separate legal entity and has no liability for another entitys acts and omissions. Is it $970? a: 1375 East Ninth Street, Suite 1800Cleveland, Ohio 44114-1790. hbspt.cta._relativeUrls=true;hbspt.cta.load(253116, 'b5743acd-1b5e-42e0-bf5e-5a2fb4c4b371', {"useNewLoader":"true","region":"na1"}); Copyright 2022 Meaden & Moore. Commitment Fee The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the Applicable Rate times the actual daily amount by which the Aggregate Commitments exceed the sum of (i) the Outstanding Amount of Committed Loans and (ii) the Outstanding Amount of L/C Obligations. Sometimes, they may not meet the definitions or criteria of IAS 23. She provides public accounting services to a wide variety of clients. A commitment fee is the amount charged by a lender to keep a specific loan amount available to a borrower. Paragraph 8 generally requires that fees received for a commitment to originate or purchase loan(s) be deferred and recognized over the life of the loan as an adjustment of the yield if the commitment is exercised. They consist of inventories, cash, accounts receivables, and fixed assets.var cid='6739695831';var pid='ca-pub-9383835618679992';var slotId='div-gpt-ad-cfajournal_org-medrectangle-3-0';var ffid=3;var alS=3021%1000;var container=document.getElementById(slotId);container.style.width='100%';var ins=document.createElement('ins');ins.id=slotId+'-asloaded';ins.className='adsbygoogle ezasloaded';ins.dataset.adClient=pid;ins.dataset.adChannel=cid;if(ffid==2){ins.dataset.fullWidthResponsive='true';} Deloitte's A Roadmap to the Issuer's Accounting for Debt provides a comprehensive overview of the application of US GAAP to debt arrangements. These assets include resources owned or controlled by a company. Are you still working? Prior to April 2015,financing fees were treated as a long-term asset and amortized over the term of the loan, using either the straight-line or interest method (deferred financing fees). +H_gR IFRS 9) do not specify how to separate and/or initially measure one or more parts of the loan contract, then the lender applies IFRS 15 to the whole or remaining parts of the loan contract (refer to IFRS 15, paragraph 7). Generally, the fee is calculated periodically based on the average unused credit line balance, multiplied by the fee rate and by the number of days in the period. Are commitment fees Interest expense GAAP? Similarly, it does not apply to qualifying assets measured at fair value. These borrowing costs do not become a part of the assets cost or contribute to its depreciation. A facility means the borrow doesn't have to draw down the loan immediately, but . Accounting Standards Update (ASU) 2015-03 Interest - Interest Rates (subtopic 835-30): Facilitation of debt disclosure costs these fees require that these fees be issued as a direct deduction in the execution of the related debt. For entities that are in the business of lending, there are a variety of charges and fees that can make up its revenue streams. I assume that there wont be any change on the IS meaning that those 1 million per year will still have a negative impact on a per-year basis? The description of fees for financial services may not be indicative of the nature and substance of the services provided. The fee is charged yearly on the unused portion of the credit line. Similarly, it may involve finance charges on finance leases. Commitment fees should be deferred. if(typeof ez_ad_units!='undefined'){ez_ad_units.push([[250,250],'cfajournal_org-large-leaderboard-2','ezslot_5',147,'0','0'])};__ez_fad_position('div-gpt-ad-cfajournal_org-large-leaderboard-2-0'); On top of that, borrowing costs may also generate from exchange differences from foreign currency borrowings. Some examples of fees that a lender might charge include (note that the descriptions for these fees are likely to differ from entity to entity): Questions frequently arise whether the above fees fall within the scope of IFRS 15 Revenue from Contracts with Customers or IFRS 9 Financial Instruments. The term note is valid for five years. These requirements include a description of the Companys accounting policy related to the capitalization of these types of costs, the original amount of debt issuance costs capitalized, accumulated amortization of loan fees, the periodic expense amount, projected expense amounts for the next five years and the effective interest rate of the debt after taking into account the amortization of loan fees. In the former case, they can capitalize on all the costs incurred. In both cases, the IRS concluded that the commitment fees were deductible under Sec. Closed on Weekends. Dear all, Im really wondering how the amortization is adjusted once the principal gets repaid annually is the treatment similar to OIDs, where one has to adjust loss on unamortized OID? However, the borrowing costs may not apply to the qualifying asset. 96-11), would You can define the Facility Fee component using the Basis Amount Tag 'TRANSFER_AVL' available in the Fee Class screen and Fee Definition screen for Commitment product maintenance. Effective December 15 2015, FAS changed the accounting of debt issuance costs so that instead of capitalizing fees as an asset (deferred financing fee), the fees now directly reduce the carrying value of the loan at borrowing. The fee is usually paid after the credit agreements been finalized. The amount is listed here under this liability account, showing that the amount is to be paid back. Viewpoint. Agents (including employees acting as selling agents), Levies by regulatory agencies and security exchanges, and, Commitment fees to originate a loan when the loan commitment is not measured at FVTPL and it is. The company completes all the activities necessary to prepare the qualifying asset for its intended use or sale. The Borrower also incurs legal costs of $5,000. Such fee shall be payable quarterly in arrears on the first day of each January, April, July and October during the term of this Agreement and on the Termination Date or any earlier date of termination of the Commitments or reduction of the Commitments to zero. See. accounted for under IFRS 15). The purpose of the change is part of a broader effort by FASB to simplify its accounting rules. All rights reserved. In a nutshell, company received a loan at certain interest rate for 42 months (collaterized by factory equipment). The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. What is the Accounting for a Line of Credit Fee? Learn financial statement modeling, DCF, M&A, LBO, Comps and Excel shortcuts. Lenders send borrowers commitment letters stating the commitment fee and explaining how the fee was determined. A commitment fee is a fee that is charged by a lender to a borrower to compensate the lender for keeping a credit line open. The agreed upon loan repayment period. We pay our respect to their elders past and present and extend that respect to all Aboriginal and Torres Strait Islander peoples today. The factorys cost will include the sites value and construction.if(typeof ez_ad_units!='undefined'){ez_ad_units.push([[300,250],'cfajournal_org-large-mobile-banner-2','ezslot_4',152,'0','0'])};__ez_fad_position('div-gpt-ad-cfajournal_org-large-mobile-banner-2-0'); Therefore, it will cost $30 million ($21 million factory site + $9 million construction). As mentioned, borrowing costs only apply to qualifying assets. Debit Loan Payable 10M Borrower Borrower accounting for loan commitments that are outside IAS 39's scope is largely not addressed in IFRS. USA June 29 2018. The same training program used at top investment banks. This fee may also be charged for the unused portion of a line of credit. What is the offset for the debt discount? Fee paid to lender in return for the lender committing to lend to borrower a certain amount, and it is unlikely that the borrower will draw down the amount. The rate at which the interest is imputed should approximate the rate a borrower and lender would agree on in an arm's-length transaction. An open-end loan commitment acts . 162 as business expenses rather than under Sec. The standard requires companies to differentiate between specifically borrowed funds and others. You are going to borrow $ 105,000 to fund the start of your new restaurant. Impact on Accounting Equation. What Is the Difference Between the Corporate Office and the Head Office of the Company? Qualifying assets include resources that necessarily take a substantial period to get ready. For a line of credit, the fee is usually charged on a periodic basis, based on the average unused balance on the line of credit. those cases where it is a practice to sell these commitment frequently then it will be covered under derivatives and would be accounted at Fair value at its initial recognition and marked to market accounting will be done for all . Financing fees example . You, as head of the bike company, should also record this. Instead, they must account for them as an expense. The loan amount. 9. In accounting, they fall under the scope of IAS 16. Instead, they must ensure these costs are directly attributable to three uses for the underlying asset. In such cases, the fee is based on the average balance of the undisbursed loan amount. Save & file. If a loan commitment expires without the loan being made or if a loan is repaid before the estimated repayment date, any related unrecognized fees should be recognized as revenue or expense at that time. In the former case, these costs become a part of the assets cost on the balance sheet. Facility Fees During the period from the Effective Date to but excluding the Termination Date, the Borrower agrees to pay to the Administrative Agent for the account of the Lenders a facility fee equal to the daily aggregate amount of the Commitments (whether or not utilized) times a rate per annum equal to the Applicable Facility Fee. '{,zx7(AcRV/a6P%y2j,0nlL|B^S*_-MPcXh1Bv=V3BJl|8pZL@4uy9Sd4< QUESTION 1. F. August 14, 2019 at 5:07 pm . However, those borrowing costs fall under IAS 23, which has several conditions for recognition. Excel shortcuts[citation CFIs free Financial Modeling Guidelines is a thorough and complete resource covering model design, model building blocks, and common tips, tricks, and What are SQL Data Types? However, payments for services provided by the lender, such as commitment fees, may be treated differently. While Revenue Ruling 81-160 is not explicit on the point, the IRS has held in other contexts that the commitment fees should not be treated as interest expense. My question is this: What would be the accounting treatment in the borrower's books for that example? Similarly, borrowing costs may occur during several periods. This process occurs through the capitalization of those costs.if(typeof ez_ad_units!='undefined'){ez_ad_units.push([[336,280],'cfajournal_org-large-mobile-banner-1','ezslot_0',149,'0','0'])};__ez_fad_position('div-gpt-ad-cfajournal_org-large-mobile-banner-1-0'); The standard also lists the assets that may fall under the qualifying category. The revolving line of credit matures in October 2026, at which . Please seewww.pwc.com/structurefor further details. Usually, they include interest paid on the borrowed amount.if(typeof ez_ad_units!='undefined'){ez_ad_units.push([[250,250],'cfajournal_org-box-4','ezslot_8',145,'0','0'])};__ez_fad_position('div-gpt-ad-cfajournal_org-box-4-0'); However, it may also have other related expenses. Overall, borrowing costs are any financial charges on debt finance. Credit Cash 10.3M . These funds may also come with interest or other borrowing costs. The situation above is an oversimplified . For our illustration and for simplicity purposes, each year, amortize 1/5th of the fee and group the amortization with interest expense on the Companys income statement. Borrowing costs may include interest expenses calculated using the effective interest rate. Master's Degree. However, the underlying resource must meet the qualifying asset definition set by the standard. A fee charged by a lender to a borrower to compensate for keeping a credit line open. The fee compensates the lender for the risks associated with an open credit line despite uncertain future market conditions and the lenders current inability to charge interest on the principal. 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Commitment fees are fees a lender charges for entering into an agreement under which it is obligated to fund or acquire a loan (or to satisfy an obligation of the other party under a specified condition). What are advisory firms, and how do they earn money? 2023 Wall Street Prep, Inc. All Rights Reserved, The Ultimate Guide to Modeling Best Practices, The 100+ Excel Shortcuts You Need to Know, for Windows and Mac, Common Finance Interview Questions (and Answers), What is Investment Banking? Similarly, these resources result in an inflow of economic benefits in the future. Fees payable to an external adviser assisting P with the loan renegotiation of $18,000. Here is the initial journal entry: DR: Current Contra Debt Account Loan Fees $4,000DR: Non-Current Contra Debt Account Loan Fees $16,000CR: Cash $20,000. An Industry Overview, 100+ Excel Financial Modeling Shortcuts You Need to Know, The Ultimate Guide to Financial Modeling Best Practices and Conventions, Essential Reading for your Investment Banking Interview, The Impact of Tax Reform on Financial Modeling, Fixed Income Markets Certification (FIMC), The Investment Banking Interview Guide ("The Red Book"), Revolvercommitment fees are still treated as a capital asset. Thus, the fee paid to Bank X in the second year will be calculated in the following way: Commitment Fee = Unused Amount of Credit Line Commitment Rate = ($40m - $25m) x 0.75% = $112,500. IFRS 15, recognise the commitment fee as revenue over the period of the commitment. Debt issuance costs include various incremental fees and commissions paid to third parties (not to the lender) in connection with the issuance of debt, including investment banks, law firms, auditors, and regulators. The Borrower also incurs legal costs of $5,000. The agreement requires a loan origination fee of $15,000, which is paid by the Borrower to the Lender at the date of the loans closing. 7 Types of Long-term Debt: Definition, Explanation, And More. A borrower may incur expenses to its lender in connection with a borrowing. Borrowing costs help companies finance asset construction, acquisition, or production. Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory. We and our partners use cookies to Store and/or access information on a device. So, this amount will be paid each year to the lender. IAS 23 also defines the requirements for when to commence and cease capitalizing those costs. A commitment fee is a fee charged on the undrawn portion of a lending facility. Commitment fees are typically . This means that IFRS 9 is applied first to loan contracts, and IFRS 15 only applies to fee revenue not addressed by IFRS 9. For a revolving credit facility, the borrower can increase the approval chances with a steady source of income. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Concepts Statement 6 further states that debt issuance costs cannot be an asset because they provide no future economic benefit. These events can trigger the recognition and account for borrowing costs under IAS 23. Commitment fees, as a cost of acquiring the loan, are amortized over the term of the loan. ASU 2016-15Read more , How should treat payment of bank loan commitment fees on cash flow statement? In some cases, a lender may refund a commitment fee after the associated loan has been repaid by a borrower. The loan fees should be recorded as a contra . Read the full roadmap. ins.style.display='block';ins.style.minWidth=container.attributes.ezaw.value+'px';ins.style.width='100%';ins.style.height=container.attributes.ezah.value+'px';container.appendChild(ins);(adsbygoogle=window.adsbygoogle||[]).push({});window.ezoSTPixelAdd(slotId,'stat_source_id',44);window.ezoSTPixelAdd(slotId,'adsensetype',1);var lo=new MutationObserver(window.ezaslEvent);lo.observe(document.getElementById(slotId+'-asloaded'),{attributes:true}); Of these, the fixed assets constitute a significant portion of a companys overall resources. Below is an example of debt issuance costs treatment pre- and post-ASU 2015-03. Usually, companies have an intended use or sale for those assets. The formulas used to calculate the amounts in the table are: A = PMT (Note rate, remaining amortization term, remaining principal) B = Note rate times beginning-of-year principal. thanks, Using the post-2015 accounting treatment of financing fees, would the incremental annual amortization of the contra liability account that is recognized in interest expense need to be added back to net income to compute cash flow from operations? These materials were downloaded from PwC's Viewpoint (viewpoint.pwc.com) under license. The first ASU 2015-03 requires netting debt issuance costs against the related borrowing (like how a discount would be handled), rather than presenting these issuance costs as an asset. This practice runs counter to Generally Accepted Accounting Principles (GAAP) and puts banks at risk of being out of regulatory compliance on . Notes on Commitment fees-1. As IAS 23 states, companies cannot capitalize on those costs. Such fees may include compensation for activities such as: These fees are an integral part of generating an involvement with the resulting financial instrument. More about the commitment fee will be discussed below. When co-ops acquire new long-term debt, they often incur costs in conjunction with the process. The borrower compensates the lender for guaranteeing a loan at a specific date in the future. A company, ABC Co., started constructing a new factory for its operations. 2019 - 2023 PwC. You are going to borrow $ 105,000 to fund the start of your. The Structured Query Language (SQL) comprises several different data types that allow it to store different types of information What is Structured Query Language (SQL)? When applying the effective interest method, an entity would amortise any fees, points paid or received, transaction costs and other premiums or discounts that are included in the calculation of the effective interest rate over the expected life of the financial instrument. , as Head of the undisbursed loan amount capitalize on all the activities to... States that debt issuance costs treatment pre- and post-ASU 2015-03 ( GAAP ) and puts banks at risk of out... Payments for services provided by the lender, such as commitment fees, be. The same training program used at top investment banks completes all the incurred! The revolving line of credit matures in October 2026, at which connection with a steady source income. Information on a device, or production case, they often incur costs in with. Year to the qualifying asset for its intended use or sale you, as of... Your new restaurant Statement modeling, DCF, M & a, LBO, Comps and shortcuts! Their elders past and present and extend that respect to all Aboriginal and Torres Strait peoples... Measured at fair value undisbursed loan amount available to a borrower may incur expenses to its depreciation amortized the! Average balance of the change is part of the nature and substance of the credit agreements been finalized DCF M!: definition, Explanation, and how do they earn money Strait peoples... Accounting treatment in the future each year to the PwC network and/or one or more of member! Increase the approval chances with a borrowing the standard & # x27 ; credit facility the... A & # x27 ; t have to draw down the loan immediately, but this fee also... Which has several conditions for recognition have to draw down the loan of its member.! States, companies have an intended use or sale for those assets recognition, subsequent, and treatments! Disadvantages, what is a separate legal entity and has no liability for another acts... The effective interest rate for 42 months ( collaterized by factory equipment ) expenses calculated using the effective rate... Paragraphs 8-10 of Statement 91 address the accounting treatment in the borrower & accounting for commitment fees by borrower x27 ; t to... Issuance costs treatment pre- and post-ASU 2015-03 investment bankers Excel shortcuts loan, amortized... Expenses calculated using the effective interest rate for 42 months ( collaterized by factory equipment ), how should payment! Other borrowing costs under IAS 23 105,000 to fund the start of your restaurant. Torres Strait Islander peoples today conditions for recognition: what would be the accounting for loan commitment fees costs. Effective interest rate $ 105,000 to fund the start of your lenders send borrowers commitment letters the... Paragraphs 8-10 of Statement 91 address the accounting for commitment fees by borrower for loan commitment fees cash..., payments for services provided by the lender for guaranteeing a loan at a specific loan amount do... Cash flow Statement must ensure these costs are any financial charges on debt finance measured at fair.... The associated loan has been repaid by a borrower also come with interest or borrowing! Acquiring the loan fees should be recorded as a cost of acquiring the loan, amortized. For another entitys acts and omissions associated with lending activities, Explanation, and treatments! Office of the services provided by the standard may refund a commitment fee be! Must account for borrowing costs are directly attributable to three uses for the BDO network and for of. Trigger the recognition and the balance sheet is usually paid after the associated loan has been repaid by borrower... Other treatments use or sale for those assets recognition, subsequent, and how do they money. Over the term of the change is part of the company post-ASU 2015-03 Torres Strait Islander peoples today in! Use cookies to Store and/or access information on a device legal costs of $ 5,000 and delivered fully! Question 1 downloaded from PwC 's Viewpoint ( viewpoint.pwc.com ) under license to commence and cease capitalizing those.! A & # x27 ; s books for that example for keeping a line! A revolving credit facility & # x27 ; credit facility & # ;. At a specific loan amount the recognition and account for borrowing costs may during... For loan commitment fees, may be treated differently for a line credit. As mentioned, borrowing costs under IAS 23 states, companies can not be asset. Costs incurred nutshell, company received a loan at a specific loan amount available to a may... Of Bank loan commitment fees, as a contra they must account for them an. At which the assets cost or contribute to its lender in connection a! Borrow doesn & # x27 ; credit facility, the fee is based on the sheet. Scope of IAS 16 keeping a credit line the same training program used at top investment.! Immediately, but of acquiring accounting for commitment fees by borrower loan immediately, but 91 address the accounting a... Necessary to prepare the qualifying asset for its intended use or sale for those assets recognition, subsequent, more. Of clients more about the commitment fee and explaining how the fee is separate..., M & a, LBO, Comps and Excel shortcuts become a part the. Islander peoples today conjunction with the process accounting treatment in the former case, these resources result an. Companies can not capitalize on those costs charged on the unused portion of the immediately... Member firm in Australia is a separate legal entity and has no liability for another entitys acts and omissions the. Listed here under this liability account, showing that the commitment increase the approval with. Does not apply to the qualifying asset definition set by the lender for guaranteeing a loan at certain rate... Amortized over the period of the loan renegotiation of $ 5,000 Bank loan commitment accounting for commitment fees by borrower were deductible Sec. Meet the qualifying asset Strait Islander peoples today, acquisition, or production PwC to! How should treat payment of Bank loan commitment fees, may be differently! Economic benefits in the former case, they must ensure these costs are any financial charges finance. Under this liability account, showing that the commitment fee as revenue over term. In an inflow of economic benefits in the future certain interest rate finance asset,... Practice runs counter to Generally Accepted accounting Principles ( GAAP ) and puts banks at risk of being out regulatory... Does not apply to the qualifying asset definition set by the lender, as! Must ensure these costs are any financial charges on debt finance the activities to. Period to Get ready expenses to its depreciation to simplify its accounting rules renegotiation of $ 5,000 a line. A, LBO, Comps and Excel shortcuts accounting for commitment fees by borrower equipment ) fee charged. The average balance of the change is part of the change is part of the undisbursed loan amount substantial to. The borrower also incurs legal costs of $ 5,000 in Australia is a legal. Treated differently IRS concluded that the commitment fee and explaining how the fee is a legal... Repaid by a company, should also record this are advisory firms, each of is... New restaurant explaining how the fee is based on the unused portion a. In such cases, the underlying asset send borrowers commitment letters stating the commitment fee and explaining how the is. Investment banks and explaining how the fee was determined sometimes, they often incur costs in with. To prepare the qualifying asset for its intended use or sale fee will be paid back cases, borrowing. The unused portion of a broader effort by FASB to simplify its accounting rules both,... Recognition, subsequent, and how do they earn money acquire new Long-term debt: definition, Explanation, more... Charged by a company, should also record this recognition and the balance sheet of! ) Get instant access to video lessons taught by experienced investment bankers may not meet the asset. Asset definition set by the lender, such as commitment fees, as a cost of acquiring the fees... Other borrowing costs are any financial charges on finance leases effort by FASB to simplify its accounting rules the cost! Similarly, these resources result in an inflow of economic benefits in the future the is! Viewpoint ( viewpoint.pwc.com ) under license were downloaded from PwC 's Viewpoint ( viewpoint.pwc.com ) under license qualifying asset set. An intended use or sale for those assets, a lender to a. To borrow $ 105,000 to fund the start of your for 42 months ( collaterized by factory equipment.! The future fee was determined treat payment of Bank loan commitment fees, as Head of the provided... Assets cost or contribute to its lender in connection with a borrowing loan of., those borrowing costs may occur during several periods should treat payment of Bank loan fees! To qualifying assets measured at fair value facility, the borrower compensates the lender occur! A line of credit is the amount charged by a lender may refund a commitment fee is paid., acquisition, or production provide no future economic benefit the associated loan has been repaid a! Assets include resources that necessarily take a substantial period to Get ready of Long-term debt, often! Company completes all the activities necessary to prepare the qualifying asset definition set by the lender Store access. Costs may include interest expenses calculated using the effective interest rate for 42 months ( by. And Excel shortcuts involve finance charges on finance leases facility & # x27 ; s books for example! Post-Asu 2015-03 date in the future may refund a commitment fee and explaining how fee. Costs in conjunction with the loan renegotiation of $ 5,000 Office of the nature and substance the... Any financial charges on finance leases x27 ; s books for that example construction acquisition... Practice runs counter to Generally Accepted accounting Principles ( GAAP ) and puts banks at risk of being of...

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