Financial Reporting - adjustments for capitalized interest

[chancornelius]

Why capitalized interest from construction in progress is added back for adjusted interest expense but not adjusted EBIT?

 

[S2000magician]

There’s no adjustment to make to EBIT. EBIT’s before interest, and there’s no depreciation because the construction is in progress.

 

[h21]

S2000magician wrote:
There’s no adjustment to make to EBIT. EBIT’s before interest, and there’s no depreciation because the construction is in progress.

On a different topic, if converting a lease from operating lease to capitalized lease, why we calculate the new interest expense as total finance lease * discount rate + original lease, I might have forgotten something basic but not sure why we treat the depreciation as interest….

 

[S2000magician]

h21 wrote:

S2000magician wrote:There’s no adjustment to make to EBIT. EBIT’s before interest, and there’s no depreciation because the construction is in progress.

On a different topic, if converting a lease from operating lease to capitalized lease, why we calculate the new interest expense as total finance lease * discount rate + original lease, I might have forgotten something basic but not sure why we treat the depreciation as interest….

Please make a new thread for this topic, so that this thread doesn’t get derailed.