Final answer:
The FASB allows capitalizing interest costs for assets constructed for internal use or as discrete projects for sale or lease. This affects investment strategies and the evaluation of financial performance relating to the use of financial capital.
Step-by-step explanation:
Yes, the Financial Accounting Standards Board (FASB) does allow capitalizing interest costs incurred for assets constructed for internal use or assets produced as discrete projects, such as ships or real estate projects, for sale or lease. Such costs are included as part of the historical cost of acquiring an asset and are thereby capitalized and amortized over the useful life of the asset.
Capitalizing interest costs can be critical for investment strategies as it affects the financial statements and the timing of expense recognition. Firms that are involved in constructing significant projects must carefully consider the financial capital implications of their accounting choices. It's also important to note that there are specific FASB guidelines (ASC 835-20) that detail the conditions under which interest may be capitalized.
Larger companies or those in the startup phase may need capital from outside investors to fund these substantial investments, and the decision to capitalize interest will consequently affect how their financial performance is evaluated by potential investors.