Qualified assets

The primary object of Standard No. 34 was to recognize interest cost as a significant part of the historical cost of acquiring an asset. The criteria for determining if an asset qualifies for interest capitalization are that the asset must not yet be ready for its intended purpose and must undergo activities necessary to get it ready. Qualified assets are defined as (1) assets that are constructed or otherwise produced for the organization's own use and (2) assets intended for sale or lease. Standard No. 34 excluded interest capitalization for inventories that are routinely produced. Assets that are presently in use were also excluded.