Imperial Chemical Industries,a U.K.corporation,recorded interest incurred in constructing fixed assets as an expense of £128,000,000. When reconciling ICI's financial statements to U.S.GAAP,what should be done with this interest?

Question

Quizplus · Accepted Answer

According to U.S. GAAP, interest incurred during the construction of fixed assets is capitalized as part of the cost of the asset, rather than expensed. Therefore, the interest should be added to the fixed asset account balance to reflect the full cost of the asset.