Which statement concerning the capitalization of interest is FALSE?

The statement asserting that construction financed with tax-exempt debt automatically follows FASB Statement No. 62 is incorrect. This is because the treatment of interest capitalization under tax-exempt financing does not strictly follow a specific FASB statement without consideration of other factors. Generally, the guidance on capitalization of interest is influenced by the timing and nature of the financing arrangements, as well as how those arrangements interact with the standards set out by the Financial Accounting Standards Board (FASB).

Tax-exempt debt may have its own set of guidelines and does not universally dictate the application of the FASB Statement No. 62. Instead, the organization must evaluate the specific context and relevant accounting standards that pertain to both tax-exempt financing and the capitalization practices in question.

Understanding the nuances in how different financing methods impact interest capitalization is critical, rather than assuming that all tax-exempt financed capitalizations fit a singular FASB model.