Deferred charges

Deferred charges are costs already incurred but whose economic benefit extends over multiple accounting periods, spreading their recognition over their expected useful life rather than expensing them immediately. Under French GAAP (PCG), certain incorporation costs, loan issuance fees and restructuring charges may be deferred. Under IFRS, treatment is more restrictive — costs are either capitalised (if meeting intangible asset criteria) or expensed immediately. In financial due diligence, deferred charge balances are reviewed for appropriateness, as their deferral artificially smooths the income statement and may mask one-off costs.

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Example: a French company has booked CHF 480,000 of loan issuance fees as deferred charges, amortised at CHF 96,000/year over 5 years. Under IFRS restatement, these fees are deducted from the loan nominal value (effective interest rate method) — altering EBITDA presentation and balance sheet ratios, and requiring restatement in the normalised financial analysis used for valuation.

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Hectelion restates deferred charges to IFRS standards in earnings quality reviews for French acquisition targets.