If money is borrowed for the purpose of constructing a building or other facility, the interest incurred during the period of construction should be added to the cost of such building or facility.

Question

Quizplus · Accepted Answer

According to accounting principles, any interest incurred during the period of construction should be capitalized and added to the cost of the building or facility being constructed. This is because the interest is directly related to the construction activity and represents an additional cost incurred to complete the project.

If Money Is Borrowed for the Purpose of Constructing a Building