if capitalize interest expense, is the PV of all interest expense show up at liability and aset the same amount? over year, the interest expense is charged in the form of depreciation? os reduce CFO? besides that, any other charge? Thanks.
yes. the way i see it: initially capitalise --> increase assets, increase liabilities, decrease expenses, higher income, higher equity, etc… as time goes on: since the total expense is being spread out (as opposed to being expensed all in one go), net income will be lower over the years
Hi hw0799 what do you mean by ‘os reduce CFO’? Thanks, Andrew
os = or
Ah I get it. So the interest expense (rather than being debited directly from CFO) is generated via depreciation of an artificially created asset. Which presumably can be straight-line, accelerated etc. Does this depreciation therefore hit CFF? Thanks, Andrew
Ignore that it’s non-cash of course