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U.S. GAAP Codification Accounting Topics

Financial Reporting Guide

Principles of AccountingU.S. GAAP Financial Reporting Guide
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Section 3220: Capitalization of Interest Costs

[U.S. GAAP Codification Topic]
835 Interest
835-10 Overall
835-20 Capitalization of interest
835-30 Imputation of interest

[U.S. GAAP before the Codification]
SFAS 34, October 1979, Capitalization of Interest Cost
SFAS 42, November 1980, Determining Materiality for Capitalization of Interest Cost, an amendment of FASB Statement No. 34
SFAS 58, April 1982, Capitalization of Interest Cost in Financial Statements That Include Investments Accounted for by the Equity Method, an amendment of FASB Statement No. 34
SFAS 62, June 1982, Capitalization of Interest Cost in Situations Involving Certain Tax-Exempt Borrowings and Certain Gifts and Grants, an amendment of FASB Statement No. 34

1. For certain qualifying assets, interest costs are capitalized
--> and included in determining the acquisition cost of asset

2. Qualifying assets for interest capitalization
(1) Assets that are constructed or produced
--> for the entity's own use
(2) Assets that are constructed or produced
--> for sale or lease as discrete projects

3. Interest cost is not capitalized
--> for inventories

4. Amount of interest to be capitalized
(1) Amount to be capitalized
--> average accumulated expenditures x capitalization rate
(2) Total amount of interest cost capitalized
--> cannot exceed the total interest cost incurred

5. Capitalization rate
(1) Specific borrowings for the construction
--> interest rate for specific borrowings
(2) For the average accumulated expenditures over the specific borrowings
--> weighted average interest rate of other borrowings

6. Capitalization period
(1) Capitalization begins when (a), (b), (c) occur
(a) Interest cost is incurred
(b) Construction activities are in progress
(c) Expenditures are incurred
(2) Capitalization ends when (d) and (e) occur
(d) The asset is substantially complete
(e) The asset is ready for its intended use

7. Interest income is recognized in earnings
--> 320-10-35: Interest income from investments

8. Interest cost is recognized using interest method
--> 470-10-35: Interest cost of debt

9. International Financial Reporting Standards (IFRS)
IAS 34: Borrowing Costs

Index of U.S. GAAP Financial Reporting Guide

U.S. GAAP by Codification Topics 
 105  GAAP Hierarchy 
 105  GAAP History 

 205  Presentation of Financial Statements 
 205-20 Discontinued Operations 
 210  Balance Sheet 
 210-20 Offsetting 
 220  Comprehensive Income 
 225  Income Statement 
 225-20 Extraordinary and Unusual Items 
 230  Statement of Cash Flows 
 250  Accounting Changes and Error Corrections 
 260  Earnings per Share 
 270  Interim Reporting
 310  Impairment of a Loan
 320  Investment Securities 
 320  Other-Than-Temporary Impairments, FSP FAS 115-2 
 320-10-05 Overview of Investments in Other Entities 
 320-10-35 Reclassification of Investments in Securities
 323-10 Equity Method Investments
 323-30 Investments in Partnerships and Joint Ventures 
 325-20 Cost Method Investments 
 330  Inventory

 340-20 Capitalized Advertising Costs 
 350-20 Goodwill 
 350-30 Intangibles Other than Goodwill 
 350-40 Internal-Use Software 
 350-50 Website Development Costs 
 360  Property, Plant and Equipment
 360-20 Real Estate Sales

 410  Asset Retirement and Environmental Obligations 
 420  Exit or Disposal Cost Obligations 
 450  Contingencies 
 450-20 Loss Contingencies 
 450-30 Gain Contingencies
 480  Redeemable Financial Instruments 

 505-20 Stock Dividends, Stock Splits 
 505-30 Treasury Stock 

 605  SEC Staff Accounting Bulletin, Topic 13 
 605-25 Revenue Recognition - Multiple Element Arrangements 
 715-30 Defined Benefit Plans - Pension
 718  Share-Based Payment 
 730  Research and Development 
 730-20 Research and Development Arrangements 

 805  Business Combinations  
 810  Consolidation 
 810  Noncontrolling Interests 
 810  Consolidation of Variable Interest Entities, SFAS 167 
 815  Derivatives and Hedging Overview 

 820  Fair Value Measurements  
 820  Fair value when the markets are not active, FSP FAS 157-4
 825  Fair Value Option 

 830  Foreign Currency Matters 
 830-20 Foreign Currency Transactions 
 830-30 Translation of Financial Statements 
 835  Interest 
 835-20 Capitalization of Interest 
 835-30 Imputation of Interest 

 840  Leases 
 840-20 Operating Leases 
 840-30 Capital Leases 
 840-40 Sale-Leaseback Transactions
 845  Nonmonetary Transactions 

 855  Subsequent Events 
 860-20 Sale of Financial Assets, SFAS 166 
 860-50 Servicing Assets and Liabilities, SFAS 156 

 985-20 Costs of software to be sold  

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