BCONSTRUCTION INTEREST CAPITALIZED AS PART OF FIXED ASSETS IS NOT...
71) B
Construction interest capitalized as part of fixed assets is not reported as cash flow from operations (CFO)
but rather as a cash flow from investing (CFI). For the capitalizing firm, Firm A, CFO will be overstated and
CFI is understated. This means that for the expensing firm, Firm B, CFO will be lower and CFI will be
higher. The differences are permanent. Overall cash flow is not affected.