Answer
If interest capitalization is allowed, disclosures required range from:
i. The amount of interest cost incurred and charged to expense during the period, for an accounting period in which no interest cost is capitalized, and
ii. The total amount of interest cost incurred during the period and the amount thereof that has been capitalized, for an accounting period in which some interest cost is capitalized.
Work Step by Step
Interest capitalization involves the accumulation of unpaid interest to the principal amount. Therefore, the principle balance of a loan increases within periods when payments are postponed during periods of deferment.
