Final answer:
Directly related borrowing costs for an asset being constructed for sale are most likely capitalized, as they are added to the cost of the asset rather than being expensed during the construction period.
Step-by-step explanation:
When constructing an asset for sale, directly related borrowing costs are most likely capitalized. Capitalization of borrowing costs refers to including them in the cost of the asset rather than expensing them in the period in which they are incurred. This practice is consistent with the accrual basis of accounting, where expenses are matched with the revenues they help to generate. For example, if a company borrows money to construct a building that it intends to sell, the interest and other costs associated with that loan will be added to the cost of the building rather than being treated as an expense in the income statement during the construction period.