{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/835/20/#05-overview-and-background","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"835","topic_title":"Interest","subtopic":"835-20","subtopic_title":"Capitalization of Interest","section":{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-20-05-1","para":"05-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_D3EF2B08-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Subtopic establishes standards of financial accounting and reporting for capitalizing <a href=\"/glossary/i/#interest-cost\" class=\"term\" title=\"Interest cost includes interest recognized on obligations having explicit interest rates, interest imputed on certain types of payables in accordance with Subtopic 835-30, and interest related to a finance lease determined in accordance with Topic 842. With respect to obligations having explicit interest rates, interest cost includes amounts resulting from periodic amortization of discount or premium and issue costs on debt.\"><span>interest cost</span></a> as a part of the historical cost of acquiring certain assets. </span></span><span class=\"sfragment\" id=\"sfr_D3EF2CB2-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The historical cost of acquiring an asset includes the costs necessarily incurred to bring it to the condition and location necessary for its <a href=\"/glossary/i/#intended-use\" class=\"term\" title=\"Intended use of an asset embraces both readiness for use and readiness for sale, depending on the purpose of acquisition.\"><span>intended use</span></a>. </span></span><span class=\"sfragment\" id=\"sfr_D3EF2DEF-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If an asset requires a period of time in which to carry out the <a href=\"/glossary/a/#activities\" class=\"term\" title=\"The term activities is to be construed broadly. It encompasses physical construction of the asset. In addition, it includes all the steps required to prepare the asset for its intended use. For example, it includes administrative and technical activities during the preconstruction stage, such as the development of plans or the process of obtaining permits from governmental authorities. It also includes activities undertaken after construction has begun in order to overcome unforeseen obstacles, such as technical problems, labor disputes, or litigation.\"><span>activities</span></a> necessary to bring it to that condition and location, the interest cost incurred during that period as a result of <a href=\"/glossary/e/#expenditures\" class=\"term\" title=\"Expenditures to which capitalization rates are to be applied are capitalized expenditures (net of progress payment collections) for the qualifying asset that have required the payment of cash, the transfer of other assets, or the incurring of a liability on which interest is recognized (in contrast to liabilities, such as trade payables, accruals, and retainages on which interest is not recognized).\"><span>expenditures</span></a> for the asset is a part of the historical cost of acquiring the asset. </span></span></div></div>","snippet":"This Subtopic establishes standards of financial accounting and reporting for capitalizing interest cost as a part of the historical cost of acquiring certain assets. The historical cost of acquiring an asset includes th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:13be9e51b61b4bb74f0bde9a2f19177d123b5114113540008d6518fca4e55693","downloaded_from":"2026-09-10T01:48:58.518Z","last_downloaded_at":"2026-09-10T01:48:58.518Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483012","source_sha256":"e0459bf7b0129fdca0580599b8207f6fbd74ffe9639a121f7f2013dc28b26d0c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1fb941fbece7a56d23d4aa99c96a56b56abf68b3afd6abed021a65f016beb51c","downloaded_from":"2026-09-10T01:48:58.518Z","last_downloaded_at":"2026-09-10T01:48:58.518Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483012","source_sha256":"e0459bf7b0129fdca0580599b8207f6fbd74ffe9639a121f7f2013dc28b26d0c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:71ec9b3c526a6786492ce157a355ad1c0b4b9c691260e5863ee60532e7d68204","downloaded_from":"2026-09-10T01:48:58.518Z","last_downloaded_at":"2026-09-10T01:48:58.518Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483012","source_sha256":"e0459bf7b0129fdca0580599b8207f6fbd74ffe9639a121f7f2013dc28b26d0c"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:71ec9b3c526a6786492ce157a355ad1c0b4b9c691260e5863ee60532e7d68204","downloaded_from":"2026-09-10T01:48:58.518Z","last_downloaded_at":"2026-09-10T01:48:58.518Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483012","source_sha256":"e0459bf7b0129fdca0580599b8207f6fbd74ffe9639a121f7f2013dc28b26d0c"}}