Interest may be included in the acquisition cost of a hotel asset

Question

Quizplus · Accepted Answer

If the asset acquisition is financed by a long-term note payable, interest may be included in the acquisition cost of a hotel asset. This is because the interest expense incurred during the period of time it takes to construct or acquire the asset is considered a necessary cost of acquiring the asset. However, during the construction period of a self-constructed asset or as part of a lump-sum purchase, interest may not be capitalized as a cost of acquiring the asset.

Interest May Be Included in the Acquisition Cost of a Hotel