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    wemiller05's Avatar
    wemiller05 Posts: 1, Reputation: 1
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    #1

    May 1, 2009, 12:38 PM
    Recording closing cost
    How are closing cost on a home/business purchase to be recorded on the financial statements? Should they be included in the loan principal amount or expensed in the P&L
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    May 1, 2009, 07:07 PM

    First of all the, the loan should be recorded for whatever the loan actually was. You have a certain amount of money you have to pay out in order to buy real property, and if part of it was paid in cash and the rest financed, there isn't any purpose in splitting down what was what. What is financed is what is financed and that's your loan. How much did you borrow?

    The cost of an asset includes any normal expenditures associated with purchasing that asset. Closing costs are part of the cost of purchasing real property. Therefore, capitalized, not expensed.
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