Interest incurred during the development and manufacture of a machine must be capitalized.

Question

Quizplus · Accepted Answer

According to generally accepted accounting principles (GAAP), interest incurred during the development and manufacture of a machine should be included as part of the cost of the asset and therefore capitalized. This is because the interest expense is directly related to the acquisition and production of the asset and is necessary to get the asset ready for its intended use.

Interest Incurred During the Development and Manufacture of a Machine