According to SFAS No.34,"Capitalization of Interest Cost," interest should be capitalized for assets that are
A) in use or ready for their intended use in the earnings activities of the enterprise.
B) being constructed or otherwise being produced as discrete projects for an enterprise's own use.
C) not being used in the earnings activities of the enterprise and that are not undergoing the activities necessary to get them ready for use.
D) routinely produced on a repetitive basis for inventory but require an extended period of time for completion.

Question

Quizplus · Accepted Answer

SFAS No. 34 specifies that interest should be capitalized for assets that are being constructed or otherwise produced as discrete projects for an enterprise's own use. This is because the construction phase often involves significant expenditures and borrowing, and capitalizing interest during this period matches the costs of financing the asset with its future benefits.