Interest is eligible to be capitalized as part of an asset's cost, rather than being expensed immediately, when:
A) The interest is incurred during the construction period of the asset.
B) The asset is a discrete construction project for sale or lease.
C) The asset is self-constructed, rather than acquired.
D) All of these answer choices are correct.

Question

Quizplus · Accepted Answer

All of the given answer choices are correct scenarios where interest can be capitalized as part of the cost of an asset. If interest is incurred during the construction period of the asset, it can be capitalized since it is directly related to the construction of the asset. If the asset is a discrete construction project for sale or lease, interest related to the construction can be capitalized as part of the cost of the project. If the asset is self-constructed, rather than acquired, interest related to the self-construction can also be capitalized as part of the asset's cost.

Interest Is Eligible to Be Capitalized as Part of an Asset's