Tenax Therapeutics' (TENX) CEO John Kelley on Q3 2015 Results-Earnings Call Transcript.
Debit the cost of the asset and credit the loan account with the capitalized interest. In the example, debit the asset cost and credit the loan account with $50,000. The asset cost available for depreciation at the end of Year One is therefore $1,050,000. Debit the interest expense account and credit the loan account with any interest paid in excess of the interest capitalized. For example, if the total interest paid in the first year was $75,000, debit the interest expense account and credit the loan account with $75,000 minus $50,000, or $25,000.
Easy way to understand where to put your debits and credits. 1  A Debit to the balance sheet is good (increasing an asset or reducing a liability). 2  A Debit to the profit and loss is bad (increasing an expense or reducing income).3  A Credit to the balance sheet is bad (reducing an asset or increasing a liability).ebits and Credits Explained. Every transaction you make will lead to (at least) two entries in your accounts, a debit and a credit. More complex transactions may lead to a larger number of postings, but the total of the debits for that transaction will always be equal to the total of the credits.