GASB addresses interest cost incurred before a construction period ends

By Ken Tysiac

State and local governments will provide new information to financial statement users under a standard GASB issued Friday that establishes accounting rules for accounting for interest cost incurred before the end of a construction period.

GASB issued Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period, to simplify this accounting as well as to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period.

Under the standard, governments preparing statements using the economic resources measurement focus are required to recognize interest cost incurred before the end of a construction period as an expense in which the cost is incurred. Such interest should not be capitalized as part of the historical cost of a capital asset.

Governments that prepare financial statements using the current financial resources measurement focus are required under the standard to recognize interest incurred before the end of a construction period as an expenditure on a basis consistent with governmental fund accounting principles.

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

RESOURCES

Keeping you informed and prepared amid the coronavirus outbreak

We’re gathering the latest news stories along with relevant columns, tips, podcasts, and videos on this page, along with curated items from our archives to help with uncertainty and disruption.

VIDEO

Excel walk-through: Sparklines

Want to liven up your spreadsheets with some color and graphical elements? Kelly L. Williams, CPA, Ph.D., shows how to use Excel sparklines, which illustrate data trends and patterns via small charts that fit in a single Excel cell.