What is the difference between hard and soft costs and how are these to be recorded under GAAP?
Hard costs are all costs associated with the construction or purchase of capital assets and any major additions in the form of additional construction and improvements which add value to those assets. Soft costs are expenses that do not meet capital asset criteria and fail to add value to existing buildings. For a more detailed explanation of hard and soft costs, see GAAP Flyer No. 2 (Fixed Assets) on our webpage.