let say, this is for an aircraft company: EBIT 500 Interest Income 50 Interest Expense 200 Interest Capitalized 100 EBT 150 however, to normalize EBIT 500 Interest Income 50 Interest Expense 200 Interest Capitalized 0 EBT 50 Am I right?
I mean if I have a doubt whether the interest was capitalized properly or I want to have a conservative estimate of EBT, should I just add back/expense the capitalized interest?
In the first instance your EBT should be 250, capitalised intered is not an expense, it is a debit to your assets. So if you doubt whether it should have been capitalised you make it an expense, addint it to your interest expense. Therefore EBT will be 150. If I am understanding what you are after correctly.\
Also, along the same lines, some of the if some of the interest was depreciated as part of the asset you could take that out to get apples to apples comps (if what you were giving was an activity and not a balance). Prob immaterial though…