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Interest is capitalized during the construction period for a) assets built for a company's own use as well as b) assets constructed as discrete projects for sale or lease (a ship or a real estate development, for example) This excludes from interest capitalization inventories that are routinely manufactured in large quantities on a repetitive basis and assets that already are in use or are ready for their intended use. Hence Only assest that are constructed as discrete projects qualify for interest capitalization. Only interest incurred during the construction period is eligible for capitalization.

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Q: When is interest capitalized to plant assets?
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No


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Interest is capitalized because it helps finance the construction of a long-term asset. Interest is money paid regularly at a certain rate.


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