A company is constructing a new factory and incurs interest costs on the construction loan. How should these costs be treated under GAAP and IFRS?

• A. Interest costs should be expensed immediately.
• B. Interest costs should be amortized over the life of the factory.
• C. Interest costs should be capitalized and included in the cost of the factory.
• D. Interest costs should be recorded as a liability.

Answer: (C)