ASC 835-20
Weighted-average accumulated expenditures, the capitalization rate applied in the right order, the actual-interest ceiling enforced — and the capitalization entry posted to your ledger.
Almost nobody computes WAAE correctly by hand. The engine does it every period.
Capitalized interest is the schedule most often approximated. The correct base is weighted-average accumulated expenditures — every cost line weighted by how long it was outstanding within the period — and the common shortcut of averaging the opening and closing CIP balance is materially wrong on any project with uneven spend.
The rate is a second trap. Specific borrowings apply first, up to their principal; only the excess picks up the weighted-average rate on other debt. Applying one blended rate to the whole base is simpler and produces a different number.
And the ceiling is usually a manual check that nobody runs. Interest capitalized cannot exceed interest actually incurred, which matters exactly when a project is large relative to the debt behind it — the case where the error is also largest.
Enter the terms once. The schedule builds itself, period by period, to the standard.
Each cost line weighted by the portion of the capitalization period it was outstanding — the base the whole calculation depends on, and the part most often approximated by hand.
The rate on borrowings specific to the asset first, then the weighted-average rate on your other outstanding borrowings for expenditures beyond that principal.
WAAE multiplied by the capitalization rate, computed per period rather than estimated once and rolled forward.
Capitalized interest is capped at total interest cost actually incurred in the period. The schedule applies the ceiling rather than leaving it as a manual check nobody performs.
Runs while expenditures are being incurred, activities necessary to ready the asset are in progress, and interest cost is being incurred — and stops when the asset is substantially complete and ready for its intended use.
Every cost line tracked against the project, with the transfer to the in-service asset class when construction completes and depreciation begins.
Approve once. Post a month at a time — straight into QuickBooks Online, Xero, or Dynamics 365 Business Central, with a document ID on every line and duplicate posting blocked.
Read-only by design. AccelClose never touches cash, vendors, or payments. It reads your ledger and writes journal entries you have already approved — nothing more.
Every expenditure has to be weighted by how long it was outstanding within the period, so a cost incurred in month one carries far more weight than one incurred in month eleven. Teams often shortcut it with a simple average of opening and closing balances, which is materially wrong on a project with uneven spend.
If there is a borrowing specific to the asset, its rate applies to expenditures up to that borrowing's principal. Beyond that, you apply the weighted-average rate on your other outstanding borrowings. The schedule carries both and applies them in order.
No. Total interest capitalized in a period cannot exceed the total interest cost actually incurred. That ceiling is applied automatically rather than left as a manual check.
When the asset is substantially complete and ready for its intended use. It also suspends during periods when activities necessary to ready the asset are interrupted.
Yes. When construction completes, the accumulated CIP balance transfers to the in-service asset class and the depreciation schedule begins from that basis — the capitalized interest included.
Summarized for general information. Substantial-completion timing and the composition of qualifying expenditures remain judgments for you and your auditor.
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