2.8 Costs of raising finance

The direct costs of raising loan finance, such as arrangement fees, should be amortised over the period of the loan. This cannot happen with share issue costs because there is no period of issue for shares – shares may or may not be repaid at a future date. 

Share issue costs must be debited to reserves when they are incurred, as a movement in the SOCIE. Other general costs associated with share issues, such as developing a business plan, must be expensed, and cannot be capitalised as fixed assets because their connection to the asset is not sufficiently direct.