(Interest Capitalization) The main principle of interest expenses İs that a company's interest expense and foreign exchange losses due to borrowing should be expended. In acquiring a good or a fixed asset or in producing such a good or fixed asset the related cost vvhether in the form of interest or interest plus foreign exchange loss of credits that have been borrowed specifically to fund such an acquisition or production is part of that good or fixed asset. This statement never means that a good or fixed asset is overstated. The main pillar of accounting is that an asset is reported at lower of cost or net realizable value. This subject gained additional importance in Turkey with the start of application of "inflation accounting rules" to be applied to non monetary assets containing capitalized real interest (inflation adjusted) as of 31st of December 2003 and onwards. Our tax laws envisage the the financial events through glasses focused on tax matters only and produces decrees that permit capitalization of interest and foreign exchange losses in an unlimited fashion. In practice, interest capitalization [eads a company's assets to be overstated and it denies the comparability of two similar companies that one recognizes interest capitalization as a principle while the other one does not.
Field : Sosyal, Beşeri ve İdari Bilimler
Journal Type : Uluslararası
Relevant Articles | Author | # |
---|
Article | Author | # |
---|