Capitalized interest - sustany/dvg GitHub Wiki

Capitalized interest refers to accrued interest on an asset or loan that is not immediately reported on the company�s income statement as an expense like other interests. Instead, the corporation�s balance sheet reflects the interest in the total value of the asset, and the income statement reflects the accrued interest later as a depreciation of the asset. This reporting method has multiple benefits for a corporation such as reduced taxes after depreciation. Capitalized interest can only be used for long-term assets, usually in the form of constructing real estate such as a headquarters.�

The term capitalized interest frequently is used to mean capitalized accrued interest which refers to all of the interest a corporation owes presently on a loan and has no connection to capitalized interest for a long-term asset.