Receiving a bank loan net of an arrangement fee

Transaction

The company borrows $60,000.00 from its bank on a three-year note, repayable in full at maturity. The bank deducts a loan fee of $900.00 and deposits the rest in the company’s checking account today.

Assumptions: Debt issuance costs are deducted from the carrying amount of the note (ASC 835-30): the note is recorded at the net amount received.