Which of the following assets do not qualify for capitalization of interest costs incurred during construction of the assets?
A) Assets under construction for an enterprise's own use.
B) Assets intended for sale or lease that are produced as discrete projects.
C) Assets financed through the issuance of long-term debt.
D) Assets not currently undergoing the activities necessary to get them ready for use.

Question

Quizplus · Accepted Answer

Interest costs can be capitalized during the period of time that is required to complete and prepare the asset for its intended use. This includes assets under construction for an enterprise's own use (A), assets intended for sale or lease that are produced as discrete projects (B), and assets financed through the issuance of long-term debt (C). However, interest costs cannot be capitalized for assets that are not currently undergoing the activities necessary to get them ready for use (D), as the capitalization of interest is intended to be part of the cost of constructing or producing an asset, not for assets that are idle or not in the process of being prepared for use.

Which of the Following Assets Do Not Qualify for Capitalization