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Within the financial income statement, there is an account created specifically for capitalized interest. Essentially, this account holds a suitable amount of monetary funds to be expended out to upcoming interest payments. This account is considered to be an asset and is expended as time goes on throughout the fiscal year.

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Q: What is meant by capitalized interest?
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Why is interest capitalized?

Interest is capitalized because it helps finance the construction of a long-term asset. Interest is money paid regularly at a certain rate.


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Interest received is the amount in currency that has been realized at the end of the term(on liquidation).Where as, bank will be calculating interest and that will be accrued to your account based on the frequency set, (daily,weekly..) for calculation purpose..


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Compound interest means that the amount of interest earned during a period increases the principal, which is then larger for the next interest period.


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Capitalization occurs when your lender or loan servicer adds the amount of unpaid, accrued interest on your student loan to your loan balance. Once this interest has been capitalized, interest begins to accrue on that new, higher loan balance.


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