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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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What are the primary differences between U.S. GAAP and IFRS with regard to the capitalization of interest on self-constructed assets?

To determine

Explain the primary difference between U.S GAAP and IFRS with regard to the interest capitalization on self-constructed asset.

Explanation

Capitalized interest:

Interest Cost incurred to finance the construction of a long-term construction projects are known as capitalized interest.

Cost of self-constructed assets:

Company sometimes constructs an item of “property, plant and equipment” which is used in the business operations and these are known as self-constructed assets. The cost of self-constructed assets comprises of expenses that are required to build an asset and put it in operating condition.

“The primary difference between U.S GAAP and IFRS with regard to the interest capitalization on self-constructed asset is as follows”:

  • Both U...

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