Oh Baby! Posted February 10, 2009 Report Share Posted February 10, 2009 Interest on a construction loan is generally capitalized to the cost of construction while the property is being constructed. I know this is correct, but I keep doubting myself. Can someone please confirm. Quote Link to comment Share on other sites More sharing options...
schirallicpa Posted February 10, 2009 Report Share Posted February 10, 2009 I taught on this at Alfred University. Yes - interest is capitalized. You may be questioning yourself, because - as usual - it is not that cut and dry. The amount of interest to be capitalized is limited to the lower of the actual interest cost incurred during the period or the "avoidable" interest. Avoidable interest is the amount of interest cost during the period that theoretically could have been avoided if expenditures for the asset had not been made. To apply the avoidable interest concept, the potential amount of interest that my be capitalized during an accounting period is determined by multiplying the interest rate(s) by the weighted-average accumulated expenditures for qualifying assets during the period. Did that help, or just make things more complicated?) Quote Link to comment Share on other sites More sharing options...
Oh Baby! Posted February 10, 2009 Author Report Share Posted February 10, 2009 Far more complicated. though I hope you are not confusing GAAP with Tax. I'm going to go ahead and capitalize. Quote Link to comment Share on other sites More sharing options...
RoyDaleOne Posted February 10, 2009 Report Share Posted February 10, 2009 As an aside what is being constructed? Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.