Tenax Therapeutics' (TENX) CEO John Kelley on Q3 2015 Results-Earnings Call Transcript.
Debit the cost of the asset and credit the loan account with the capitalized interest. In the example, debit the asset cost and credit the loan account with $50,000. The asset cost available for depreciation at the end of Year One is therefore $1,050,000. Debit the interest expense account and credit the loan account with any interest paid in excess of the interest capitalized. For example, if the total interest paid in the first year was $75,000, debit the interest expense account and credit the loan account with $75,000 minus $50,000, or $25,000.
This chapter discusses costs you can choose to deduct or capitalize. You generally deduct a cost as a current business expense by subtracting it from your income in either the year you incur it or the year you pay it. If you capitalize a cost, you may be able to recover it over a period of years through periodic deductions for amortization, depletion, or depreciation.