GASB 89 – Interest Cost in Construction

/GASB 89 – Interest Cost in Construction

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The Governmental Accounting Standards Board (GASB) has released new guidance that sets requirements for interest cost incurred before the end of a construction period.

GASB Statement No. 89, announced on June 22, requires that interest cost incurred before the end of a construction period be recognized as an expense during the period in which it is incurred using the economic resources measurement focus. This means that these interest costs will no longer be included in the historical cost of a capital asset.

Statement No. 89 was made to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period, and it aims to simplify accounting for interest cost incurred before the end of a construction period. Users will also be able to more easily compare this information for both governmental activities and business-type activities.

Statement No. 89 takes effect for reporting periods beginning after December 15, 2019; however, early application is encouraged. For more information, you can read the entirety of Statement No. 89 on the GASB website.

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2018-07-27T18:27:37+00:00