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- 2014-8-2
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EBIT and capitalization of interest expense?
Please don't kill me for bringing up this matter again, but it's still way beyond my understanding. The answer to a specific question states that "since interest cost is $10 million, capitalize interest cost would increase EBIT by $10m." I always thought that since interest cost is recorded below EBIT, so when capitalize and amortize the interest expense, EBIT would actually decrease, not increase by the exact amount of interest expense.
Could someone please explain to me? Thanks so much! |
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