December 8, 2017
The Governmental Accounting Standards Board is circulating a pair of exposure drafts proposing accounting and financial reporting guidance pertaining to the capitalization of interest cost along with a proposed Implementation Guide discussing a variety of topics.
The exposure draft on interest cost capitalization, Accounting for Interest Cost during the Period of Construction, proposes to clarify information about capital assets and borrowing costs for a reporting period, and simplify the accounting for interest costs incurred during construction.
For financial statements prepared using the economic resources measurement focus, interest cost incurred during a period of construction would be recognized as an expense in the period when the cost’s incurred. The interest cost wouldn’t be capitalized as part of the historical cost of a capital asset.
For financial statements prepared using the current financial resources measurement focus, interest incurred during construction would continue to be recognized as an expenditure on a basis consistent with governmental fund accounting principles.
The proposed Implementation Guidance Update—201Y includes questions and answers to explain various GASB Statements. It proposes guidance on different topics, including pensions, other postemployment benefits, regulatory reporting, the statistical section and tax abatement disclosures. The proposed guide also contains amendments to previous implementation guidance.
Both exposure drafts can be found on GASB’s website. GASB is asking for comments on them. Comments on the proposed interest cost guidance are due March 5, 2018, and on the proposed implementation guidance update Feb. 16, 2018.