When a company purchases land with the intention of developing it for a particular use, interest costs associated with those expenditures qualify for interest capitalization.

Question

Quizplus · Accepted Answer

According to accounting guidelines, interest costs incurred during the development period of a property intended for a particular use can be capitalized as part of the property's cost. This applies to both purchased and self-constructed property.

When a Company Purchases Land with the Intention of Developing