The period of time for which interest is to be capitalized ends when ________.
A)no additional interest cost is actually being incurred on direct financing for the acquisition of the asset
B)a constructed is substantially complete and put into use
C)a constructed asset is substantially complete and ready for its intended use
D)an acquired asset is received and ready for its intended use

Question

Quizplus · Accepted Answer

The period of time for which interest is to be capitalized ends when a constructed asset is substantially complete and ready for its intended use. This is because interest can only be capitalized during the period when interest cost is being incurred on direct financing for the acquisition or construction of the asset, and ends when there is no further interest cost being incurred. Once the asset is substantially complete and ready for its intended use, there should be no additional interest cost being incurred on the construction of the asset.

The Period of Time for Which Interest Is to Be