Capitalizing Interest: What Does "Material" Mean?

Document Type

Article

Publication Date

11-1-2004

School

Accountancy

Abstract

SFAS 34 requires the capitalization of interest as part of the cost of certain assets if the effects of capitalization are deemed material. Yet, U.S. professional standards provide virtually no guidance on what constitutes a material effect. The authors took a close look at recent research and current practice and came up with some simple materiality guidelines for interest capitalization. CEOs and CFOs are now required to certify financial statements; this is enforced with criminal penalties under Sarbanes-Oxley. So they should read this article carefully. © 2004 Wiley Periodicals, Inc.

Publication Title

Journal of Corporate Accounting and Finance

Volume

16

Issue

1

First Page

59

Last Page

64

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