Borrowing costs may include amortisations of discounts or premiums related to borrowings.

Question

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Amortisation of discounts or premiums related to borrowings can increase or decrease the borrowing costs over the term of the loan. This is because discounts or premiums represent differences between the initial proceeds of a borrowing and its face value, which must be repaid at maturity. These differences are typically recognized as adjustments to interest expense over the life of the loan, using either the effective interest method or the straight-line method of amortisation. Therefore, borrowing costs may include amortisations of discounts or premiums related to borrowings.

Borrowing Costs May Include Amortisations of Discounts or Premiums Related