Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 10 - Using Your Judgment - Bridge to the Profession - Instructions - Page 603: b

Answer

The objectives of capitalizing interest include: i. To obtain a measure of acquisition cost that more closely reflects the enterprise’s total investment in the asset. ii. To charge a cost that relates to the acquisition of a resource that will benefit future periods against the revenues of the periods benefited.

Work Step by Step

Capitalizing interest is the cost of funds used to finance the construction of long-term assets that the company is building for itself.
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.