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According to FASB Codification, is it permissible to capitalize interest on assets that are in use...

According to FASB Codification, is it permissible to capitalize interest on assets that are in use or ready for their intended use in the earnings activities of the entity? Cite the FASB Codification in providing your answer.

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Yes, according to FASB Codification ASC 835-20-30-11 & 835-20-25, it is permissible to capitalize all interest cost of the borrowing on weighted average interest on assets that are in use or ready for their intended use in the earnings activities of the entity.

Interest capitalization is required only if the interest cost is a material component in construction of the asset. If interest inclusion in the cost does not have any net effect towards valuation of the assets economic value, then the interest capitalization is not required.

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