FAR 9.17.2016

Capitalize - Freight charges are directly connected with bringing the goods tot he place of business of the buyer.

Capitalize - Insurance charges are directly connected with bringing the goods to the place of business of the buyer.

Expense - Only interest costs related to continued assets constructed for internal use or assets produced as discrete products for sale or lease should be capitalized.  The informational benefit of capitalization does not justify the cost of the accounting for the interest as a product cost.

Capitalize - Direct cost of bringing the equipment to the buyer.

Capitalize - Direct cost of converting the equipment to a usable condition.

Expense - Does not relate to bringing the equipment to the buyer or putting it into a usable condition.

• 1. Expenditures for the asset have been made
• 2. Activities intended to get asset ready are in progress.
• 3. Interest cost is being incurred

A transaction has commercial substance if the configuration of cash flows are significantly different as a result of the exchange.

Cash flows from tax effects are not considered in determining if the transaction has commercial substance.

Cash flows from tax effects are not considered in determining if the transaction has commercial substance.