I need more clarification on this Interest Capitalization stuff. I understand that the interset is capitalized and therefore becomes an asset but where in the balance sheet will be able to see this interest capitalization amount. I also would like to get as much explanation as you guys can give Thank you
If you are building a plant, the interest you would capitalize in relation to that project would get included in the cost and would go on the balance sheet on the asset side. Let’s say you incur $1,000,000 to build the plant and $100,000 of capitalized interest, you would list $1,100,000 as the value of the asset on the property, plant equipment account on the balance sheet.
ohh ok that makes sense. Thank you