CFA Practice Question
Accounting rules specify that interest must be capitalized for assets that are ______
A. being constructed or otherwise being produced as discrete projects for an enterprise's own use.
B. in use or ready for their intended use in the earning activities of the enterprise.
C. not being used in the earning activities of the enterprise and not undergoing the activities necessary to get them ready for use.
Explanation: Interest costs must be capitalized only for assets constructed for internal use, or for sale or lease as discrete projects.
User Contributed Comments 2
| User | Comment |
|---|---|
| dimanyc | Are we obligated to capitalize those assets, or is it only an option? |
| drricharddragon | It's an option under IAS but a requirement under US GAAP |