Guidance Proposed on Capitalization of Interest Cost
The Governmental Accounting Standards Board (“GASB”) wants to update guidance on construction period interest costs. In its Exposure Draft, Accounting for Interest Cost during the Period of Construction, the GASB proposes expensing interest costs incurred during the construction period.
For financial statements prepared using the current financial resources measurement focus, interest incurred during the construction period would still be categorized as an expenditure on a basis in line with governmental fund accounting principles.
If approved, the finalized GASB Statement would be applied to reporting periods starting after December 15, 2018. Early application is encouraged.
Comments on the Exposure Draft are due March 5, 2018.