When may a company include interest costs as part of the cost of the asset?
A) When they buy a piece of equipment and ﬁnance its acquisition by a bank loan.
B) When they must borrow money to ﬁnance the manufacture of their inventory items.
C) When they are self-constructing a piece of equipment they will use to manufacture their products, but only during the period of construction.
D) Interest is never allowed to be capitalized.

Question

Quizplus · Accepted Answer

Interest costs can be capitalized when a company is self-constructing an asset for its own use, but only during the construction period.

When May a Company Include Interest Costs as Part of the Cost