- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 2. Analyzing Income Statements
- Subject 3. Expense Recognition - Long-Lived Assets
CFA Practice Question
The SFAS No. 34 requirement relating to capitalization of interest costs incurred on self-construction results in immediate tax advantages. True or False?
Correct Answer: False
To minimize income tax payments, a firm would want to expense interest costs immediately rather than capitalize them and receive the tax benefit later (in the form of greater depreciation expense).
User Contributed Comments 6
| User | Comment |
|---|---|
| viannie | Tax on expensed: reap tax benefit immediately Tax on capitalized goods: reap tax benefit over the life of the goods in the form of depreciation |
| wundac | MAKES SENSE |
| Fotsta | more income-more tax |
| czar | more expense-less tax |
| Tom0409 | What is SFAS No. 34? |
| Inaganti6 | @tom0409 Something that's supposed to make your life harder when you sit for the CFA exams, basically. |