For governments that use the economic resources measurement focus to prepare financial statements, interest cost incurred prior to a construction period’s end must be labeled as an expense during the period wherein the cost is incurred. The interest cost should not be capitalized with the historical cost of a capital asset. For governments that use the current financial resources measurement focus instead, interest incurred prior to a construction period’s end should still be labeled as an expenditure in compliance with governmental fund accounting principles.
Governments can apply the guidance under GASB Statement No. 89 to reporting periods starting after December 15, 2019. Earlier application is encouraged.