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How to treat the deferred IPO cost if the company is not planning to go IPO soon?

Hi, my company was planning to go IPO last year, but got delayed and now we don't have a definite schedule on the IPO date. We have IPO reserve for about $4M booked to deferred cost account, how do we write off this balance? what is the accounting treatment for this deferred cost? thanks!

Answers

Harry Vasavada
Title: Principal
Company: MEDIA CFO SOLUTIONS
(Principal, MEDIA CFO SOLUTIONS) |

I think answer is you may have to write it off as your company aborted the IPO unless it was postponed up to 90 days. All deferred offering costs incurred through the balance sheet date that are related to the IPO and that will be charged to capital upon the completion of the offering or charged to expense if the IPO is not completed/aborted.

Simply put, if the IPO is not completed than the deferred costs of the aborted offering may not be deferred and charged against proceeds of a subsequent offering. Hope this helps. Good luck.
-Harry

PS: You may read a very helpful whitepaper from PwC "Considering an IPO? " floating on the web. Or shoot me your email and I will forward it to you.

Anonymous
(Sr. International Accountant) |

Thanks, Harry. Do you have relevant guidance related to the expenses of private offering? the costs of a private placement? So, basically, if we are planning on issuing stock, what is the guidance ? can we push this deferred cost IPO related to the APIC account ? Thanks!

Nick Sinigaglia
Title: SVP
Company: OnDeck
(SVP, OnDeck) |

SAB Topic 5(A) is the guidance you are looking for. I believe EY also has a great Hot Topic on the subject. You can also find disclosure in the S-1's of companies where they state that a termination of the IPO or a delay of more than 90 days will result in the deferred IPO costs being expensed.

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