{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/835/20/#10-objectives","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":"10","label":"10 Objectives","anchor":"10-objectives","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"835-20-10-1","para":"10-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_D3F845E6-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The objectives of capitalizing interest are to obtain a measure of acquisition cost that more closely reflects an entity's total investment in the asset and to charge a cost that relates to the acquisition of a resource that will benefit future periods against the revenues of the periods benefited. </span></span></div></div>","snippet":"The objectives of capitalizing interest are to obtain a measure of acquisition cost that more closely reflects an entity's total investment in the asset and to charge a cost that relates to the acquisition of a resource …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:980fffb907b1643fc7bdc4f1b890e9136c17b260faff05b9105d6f7d96699b72","downloaded_from":"2026-09-10T01:49:00.682Z","last_downloaded_at":"2026-09-10T01:49:00.682Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482984","source_sha256":"bd3ae931cd153c73f2f4c404fbecc6072c062b5bc06eddc3c7334d63201d4236"}},{"citation":"835-20-10-2","para":"10-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_D3F84746-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">On the premise that the historical cost of acquiring an asset should include all 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>, in principle, the cost incurred in financing <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 an asset during a required construction or development period is itself a part of the asset's historical acquisition cost. </span></span><span class=\"sfragment\" id=\"sfr_D3F8487B-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The cause-and-effect relationship between acquiring an asset and the incurrence of <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> makes interest cost analogous to a direct cost that is readily and objectively assignable to the acquired asset. Failure to capitalize the interest cost associated with the acquisition of qualifying assets improperly reduces reported earnings during the period of acquisition and increases reported earnings in later periods. </span></span></div></div>","snippet":"On the premise that the historical cost of acquiring an asset should include all costs necessarily incurred to bring it to the condition and location necessary for its intended use, in principle, the cost incurred in fin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ed98424f1f4c3d5a587c5b87704682fab7f9ddc560c647e368614b59341a5dd6","downloaded_from":"2026-09-10T01:49:00.682Z","last_downloaded_at":"2026-09-10T01:49:00.682Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482984","source_sha256":"bd3ae931cd153c73f2f4c404fbecc6072c062b5bc06eddc3c7334d63201d4236"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a8a427b29e8f43fdb0b4c5aecfd99a605a540348fbfe5a01acb57e0f5584ea73","downloaded_from":"2026-09-10T01:49:00.682Z","last_downloaded_at":"2026-09-10T01:49:00.682Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482984","source_sha256":"bd3ae931cd153c73f2f4c404fbecc6072c062b5bc06eddc3c7334d63201d4236"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a611831c1e56947537e73c30366af4fe0ee0e55b9c1004a2fccc281c942cec3e","downloaded_from":"2026-09-10T01:49:00.682Z","last_downloaded_at":"2026-09-10T01:49:00.682Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482984","source_sha256":"bd3ae931cd153c73f2f4c404fbecc6072c062b5bc06eddc3c7334d63201d4236"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a611831c1e56947537e73c30366af4fe0ee0e55b9c1004a2fccc281c942cec3e","downloaded_from":"2026-09-10T01:49:00.682Z","last_downloaded_at":"2026-09-10T01:49:00.682Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482984","source_sha256":"bd3ae931cd153c73f2f4c404fbecc6072c062b5bc06eddc3c7334d63201d4236"}}