GASB proposals address capitalization of interest costs, implementation

By Ken Tysiac

In separate exposure drafts, GASB on Friday issued proposals related to capitalization of interest costs and implementation of recent pronouncements.

One ED, Accounting for Interest Cost During the Period of Construction, proposes guidance intended to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period. It also is designed to simplify accounting for interest cost incurred during the period of construction.

Interest cost incurred during the period of construction would be measured differently depending on whether financial statements are prepared using the economic resources measurement focus or the current financial resources measurement focus.

For financial statements prepared using the economic resources measurement focus, interest cost incurred during the period of construction would be recognized as an expense in the period in which the cost is incurred. Such interest cost would not be capitalized as part of the historical cost of a capital asset.

For financial statements prepared using the current financial resources measurement focus, interest cost incurred during the period of construction would continue to be recognized as an expenditure on a basis consistent with governmental fund accounting principles. Comments on this exposure draft are due March 5 and can be emailed to director@gasb.org.

The proposed implementation guide, Implementation Guidance Update — 201Y, contains questions and answers intended to clarify, explain, or elaborate on GASB Statements. Guidance is proposed on various topics, including pensions, other postemployment benefits, the statistical section, regulatory reporting, and tax abatement disclosures. Amendments to previously issued implementation guidance also are included. Comments on this exposure draft are due Feb. 16 at director@gasb.org.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is a JofA editorial director.

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