Capitalization of construction period interest is based primarily upon the matching principle. The matching principle states that expenses should be matched with the revenues of the period to which they relate. Capitalizing interest during construction matches the interest costs incurred during the construction period with the future revenues that will be generated by the constructed asset.
Original Description:
Original Title
Capitalization of Construction Period Interest is Based Primarily Upon The
Capitalization of construction period interest is based primarily upon the matching principle. The matching principle states that expenses should be matched with the revenues of the period to which they relate. Capitalizing interest during construction matches the interest costs incurred during the construction period with the future revenues that will be generated by the constructed asset.
Capitalization of construction period interest is based primarily upon the matching principle. The matching principle states that expenses should be matched with the revenues of the period to which they relate. Capitalizing interest during construction matches the interest costs incurred during the construction period with the future revenues that will be generated by the constructed asset.