True or False: Interest capitalization should cease during any significant cessation of construction.

Interest capitalization refers to the process of adding interest costs incurred during the construction of an asset to the cost of that asset. This practice is generally in line with accounting standards that allow entities to capitalize interest costs as part of the asset's acquisition cost during construction, provided the construction is continuous and substantial.

When there is a significant cessation of construction, it suggests that progress on the asset is halted for a meaningful period. During this time, interest costs may no longer meet the criteria for capitalization since the active efforts toward construction have been interrupted. Since the asset is not being constructed during this significant cessation, any interest incurred should be expensed rather than capitalized, as it does not contribute to the asset's construction costs.

Thus, stating that interest capitalization should cease during any significant cessation of construction aligns with the intention of keeping financial records accurate and reflective of an asset's actual costs. This principle helps ensure that financial statements do not misrepresent the financial position of the entity by inflating asset values due to accrued interest when no construction is taking place.