CFA Practice Question

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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
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.
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