Construction
Capitalizing Interest on Construction Loan
Adding the interest cost of a project loan to the cost of the building being constructed (IAS 23).
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Construction in Progress (WIP) | Asset (+) | 1,500.00 | - |
| Cash / Interest Payable | Mixed | - | 1,500.00 |
💡 Accountant's Note
If you borrow money to build a 'Qualifying Asset' (like a factory), you don't expense the interest. You add it to the cost of the building until it's finished.
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