Final answer:
The claim is false as both IFRS and GAAP have provisions for capitalizing interest costs during construction but under different conditions and rules.
Step-by-step explanation:
Under both IFRS (International Financial Reporting Standards) and GAAP (Generally Accepted Accounting Principles), interest costs incurred during construction must be capitalized. This means that the interest costs are added to the cost of the construction project and treated as an asset.
They are not immediately expensed as an expense on the income statement. Instead, they are allocated over the useful life of the constructed asset through depreciation.
The statement that under both IFRS and GAAP, interest costs incurred during construction must be capitalized is false. While both International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) allow for the capitalization of interest costs during the construction period, they have different conditions for when and how much interest can be capitalized.
Under IFRS, capitalization of borrowing costs is required if certain criteria are met. According to GAAP, capitalization of interest is also mandatory, but with different specific rules.