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Problem 2 Please answer using the FASB accounting standards codification Your...

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Accounting

Problem 2
Please answer using the FASB accounting standards codification
Your client is in the planning phase for a major plant expansion, which will involve the construction of a new warehouse. The assistant controller does not believe that interest cost can be included in the cost of the warehouse, as it is a financing expense. Others on the planning team believe that some interest can be included in the cost of the warehouse, but could not identify the specific authoritative guidance for the issue. Your audit senior asks you to research the issue.
Required:
Provide authoritative support for each of the following:
a. Is it permissible to capitalize interest into the cost of assets?
b. What are the objectives for capitalizing interest?
c. Discuss which assets qualify for interest capitalization.
d. Is there a limit to the amount of interest that may be capitalized in a period?
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