Accounting in acquisition and disposition of property plant

Accounting in acquisition and disposition of property, plant and Equipment

6. USING THE FASB CODIFICATION, PLEASE ANSWER THE FOLLOWING QUESTION CAN INTEREST COSTS RELATED TO THE DEVELOPMENT OF LAND BE CAPITALIZED? FOR CREDIT, CITE THE FASB CODIFICATION REFERENCE WHERE YOU FOUND THE ANSWER TO THE ABOVE QUESTION. REMEMBER TO IDENTIFY TOPIC, SUBTOPIC, SECTION, AND PARAGRAPH.

Solution

Interest costs related to development of land can be capitalised if those costs are incurred for preparing the asset ready for its intended use and it takes substantial time for getting the asset ready for its intended use.

The following links explain the above

http://www.fasb.org/summary/stsum34.shtml

To qualify for interest capitalization, assets must require a period of time to get them ready for their intended use.

https://www.accountingtools.com/articles/when-should-i-capitalize-interest-cost.html

I hope this helps, for any further clarification please comment.