Capitalization of interest for the construction of long-lived assets is limited to the lesser of avoidable interest or interest incurred on actual borrowings from third parties.

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This statement is true according to generally accepted accounting principles (GAAP). The capitalization of interest for construction of long-lived assets should be limited to the lesser of avoidable interest (i.e. the amount of interest that could have been avoided if the funds used for construction were invested elsewhere) or the interest incurred on actual borrowings from third parties.

Capitalization of Interest for the Construction of Long-Lived Assets Is