6. Variable overhead costs incurred to self-construct an asset should be included in the cost of the asset.
7. Companies should assign no portion of fixed overhead to self-constructed assets.
8. When capitalizing interest during construction of an asset, an imputed interest cost on stock financing must be included.
9. Assets under construction for a company’ s own use do not qualify for interest cost capitalization.
10. Avoidable interest is the amount of interest cost that a company could theoretically avoid if it had not made expenditures for the asset.
11. When a company purchases land with the intention of developing it for a particular use, interest costs associated with those expenditures qualify for interest capitalization.
12. Assets purchased on long-term credit contracts should be recorded at the present value of the consideration exchanged.