Hi everyone,
So IFRS allows for offsetting the amount of interest you capitalize with the interest earned on your debt proceeds. This means lower capitalization under IFRS compared to under USGAAP. So depreciation expense under IFRS will logically also be lower in the subsequent years, which means, higher EBIT.
I read in a qbank that wether it’s USGAAP or IFRS companies capitalizing interest (supposing there is interest gains on proceeds), their EBIT would be the same. Why is that? Is it because the amount of interest offsetting the capitalization under IFRS is anyways recognized as a gain under USGAAP which makes the same EBIT anyways?
Thanks guys.