Not air silly, but a few people have made a nice living off this flim-flam. They will move on to find their next scam and leave others with the debt.

If so, then that’s a problem

Since it has already been built, the expenses incurred are ’sunk’ – whether the building was worth it or not is immaterial. “Puts ya money, takes ya chances!”

Black Flag, I cannot tell if you were speaking figuratively or not, but so far I don’t anything has been “built” other than maybe some concrete poured for a foundation.

Many people look at the cost of a property to determine current value – that is, they look into the past as a reference for the value today.

Capitalizing will make it appear the cost of the property was initially higher, but cheaper to build. Expensing it makes it appear the property was cheaper, but more expensive to build.

Since it has already been built, the expenses incurred are ’sunk’ – whether the building was worth it or not is immaterial. “Puts ya money, takes ya chances!”

The net effect is that the building built for X is now valued at somewhat less than X if it was to be sold – or borrowed against. It is meaningless if neither of those options will be executed.

How big’s the reserve on the fund balance for the rest of the asset and what’s left unreserved?

Capitalized interest is the interest added to the cost of a self-constructed, long-term asset. It involves the interest on debt used to finance the asset’s construction.

The details of capitalized interest are explained in the Financial Accounting Standards Board’s (FASB) Statement of Financial Accounting Standards No. 34, Capitalization of Interest Cost. You can find this accounting pronouncement at http://www.FASB.org/st.

In short, there must be debt involved (cash and common stock are not considered). The interest specified by the pronouncement is added to the cost of the project, instead of being expensed on the current period’s income statement. This capitalized interest will be part of the asset’s cost reported on the balance sheet, and will be part of the asset’s depreciation expense that will be reported in future income statements.

These are stupid times we are living in.