PP&E Flashcards
1
Q
GAAP vs IFRS
A
GAAP = no revaluation of PPE through OCI IFRS = can revalue PPE through OCI, not through NI
2
Q
Interest Capitalization - Specific
A
construction int + rate on other (AAE - CL)
3
Q
When are the two approaches for capitalizing interest the same?
A
When average accumulated expenditures exceeds interest bearing debt, all interest for the period is capitalized because all debt could have been avoided if the construction had not taken place. Also, if the interest rates on all debt are the same, then the two approaches yield the same results because, ultimately, only one interest rate is applied to average accumulated expenditures for computing capitalized interest.
