Which of the following is not a condition that must be satisfied before interest capitalization can begin on a qualifying asset?
A) Interest cost is being incurred.
B) Expenditures for the assets have been made.
C) The interest rate is equal to or greater than the company's cost of capital.
D) Activities that are necessary to get the asset ready for its intended use are in progress.

Question

Quizplus · Accepted Answer

The interest rate being equal to or greater than the company's cost of capital is not a condition that must be satisfied before interest capitalization can begin on a qualifying asset. The other options (interest cost being incurred, expenditures for the assets have been made, and activities necessary for getting the asset ready for its intended use are in progress) are all necessary conditions for interest capitalization to begin.

Which of the Following Is Not a Condition That Must