Company X has decided to use the fair value option to account for newly issued debt ie issuerown debt meaning that it will account for the liability associated with this debt using the fair value option. What is the appropriate accounting treatment for debt issuance cost.?

Recognize as an expense when incurred

Recognize as a component of other comprehensive income and recycle into income as a component of interest expense over the expected term of the debt.

Recognize as a basis adjustment to the carrruing amount of the debt, using a contraaccount to adjust the initial basis of the debt, in the same manner as debt issuance cost would be accounted for had the company used amortized cost to recognize the debt.

Any of the methods described herein is an appropriate application of the fair value option, as long as the company discloses the method it uses and the method is consistently applied.