Capitalization of interest is required if debt is incurred to construct real property.

Name: Capitalization of interest is required if debt is incurred to construct real property.
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According to generally accepted accounting principles (GAAP), interest incurred during the construction period must be capitalized as part of the cost of the asset (real property). This means that the interest is added to the cost of the property and depreciated over time instead of being expensed in the current period.

Capitalization of Interest Is Required If Debt Is Incurred to Construct