Construction in progress accumulates the costs of getting an asset ready for its intended use, including interest while expenditures, activities and interest cost all continue, and depreciates nothing until the asset is placed in service. On that date the project is capitalised into one asset or several, each with its own class and lives.
Construction in progress is cost waiting for an in-service date.
A project account accumulates the costs of getting an asset ready for its intended use: the contract price, materials, direct labour, engineering, permits, freight, installation and testing, and, for a qualifying asset that takes time to build, interest (ASC 360-10-30 and ASC 835-20). Nothing in the account depreciates, because depreciation starts when the asset is placed in service, for book and for tax alike. Training, relocation, abnormal waste, and the general and administrative costs of the company are not capitalised. Repairs to keep an existing asset running are not a project.
Interest is capitalised while three conditions hold.
Under ASC 835-20-25-3, interest is capitalised only while expenditures for the asset have been made, activities necessary to get it ready are in progress, and interest cost is being incurred. The amount is the weighted-average accumulated expenditures for the period multiplied by the rate on borrowings specific to the project, or the weighted-average rate on other borrowings, and it cannot exceed the interest actually incurred in the period. Capitalisation stops when the asset is substantially complete and ready for use. Governments do not capitalise interest: GASB Statement 89 requires it to be expensed, for reporting periods beginning after 15 December 2020 after the Statement 95 postponement.
| When | User | Record | Field | Before | After | Reason |
|---|---|---|---|---|---|---|
| 30 Sep 2026 16:41 | M. Reyes | Period | Period 9 | Open | Depreciation posted | Mass recalculation, 1,203 assets |
| 12 Sep 2026 14:02 | M. Reyes | 10577 | Status | In service | Disposed, sale | Replaced by unit 9 |
| 12 Sep 2026 13:55 | M. Reyes | CIP-0155 | Status | In progress | Capitalised as 10744 | Dock doors in service |
| 10 Sep 2026 09:18 | J. Okafor | 10412 | Federal convention | Half-year | Half-year (re-tested) | 40% rule check, Q3 |
| 03 Sep 2026 11:30 | Import | 27 assets | Created | From AP export 88213 to 88266 | Additions queue approved by J. Okafor | |
| 29 Aug 2026 15:07 | K. Lindqvist | 10240 | Cost | 9,600.00 | 9,840.00 | Freight added, invoice 88266 |
| Line | Amount |
|---|---|
| Costs accumulated in the project to the in-service date (contracts, materials, direct labour, permits, engineering) | 2,860,000.00 |
| Capitalised interest: weighted-average accumulated expenditures of 2,000,000.00 during construction at the 6% borrowing rate | 120,000.00 |
| Interest actually incurred in the period (the ceiling on capitalisation) | 300,000.00 |
| Total capitalised | 2,980,000.00 |
| Capitalised into: building extension, 39-year (federal), 40-year (book) | 2,250,000.00 |
| Capitalised into: process line, 7-year (federal), 12-year (book), units of production available | 610,000.00 |
| Capitalised into: site improvements, 15-year (federal and book) | 120,000.00 |
One project usually becomes several assets.
The building extension, the process line inside it and the site work outside it have different lives in every book and different tax classes, and on the federal side the line may qualify for bonus depreciation or section 179 while the building does not (unless it is qualified production property). The capitalisation step therefore splits the project's cost into assets, each with its own in-service date, and the project's balance goes to zero. A project that capitalises into one asset at the building's life understates depreciation on the equipment and overstates it on the building for decades. The lifecycle page shows the project-to-asset step; the manufacturing page is where it matters most.
What to record on the asset.
- The project, its budget, and every cost by invoice with the date, so the roll-forward's transfers-from-CIP line has support.
- The capitalised interest computation by period, with the rate and the weighted-average expenditures.
- The in-service date of each asset created from the project, which is the date depreciation starts.
- The class and lives in each book of each asset created, and the bonus or section 179 elections on the federal side.
- The project's closing balance, which should be zero, or the reason it is not.
In Fixed Asset Desk: a project accumulates cost against a budget and capitalises into one asset or several, with the class, the date and the methods set at that moment; the CIP report lists open projects.
Sources: FASB ASC 360-10-30 (initial measurement); FASB ASC 835-20 (capitalization of interest); GASB Statement 89 (accounting for interest cost incurred before the end of a construction period) and Statement 95; Internal Revenue Code section 263A (uniform capitalization). Checked 20 September 2026.