Assets that qualify for interest cost capitalization include
A) assets under construction for a company's own use.
B) assets that are ready for their intended use in the earnings of the company.
C) assets that are not currently being used because of excess capacity.
D) All of these assets qualify for interest cost capitalization.

Question

Quizplus · Accepted Answer

Assets that are under construction for a company's own use qualify for interest cost capitalization. This is because interest costs incurred during the construction period are considered part of the cost of the asset, and therefore can be capitalized. Assets that are ready for their intended use (choice B) do not qualify for interest cost capitalization, because the period of capitalization has ended. Assets that are not currently being used because of excess capacity (choice C) may be depreciated, but do not qualify for interest cost capitalization. Therefore, the best choice is A.

Assets That Qualify for Interest Cost Capitalization Include