Explain why some of the interest paid by Morguard is expensed on the income statement and some of the interest is capitalized on the balance sheet? What percentage of total interest incurred was capitalized? Consider the criteria for capitalizing interest expense

As at December 31 Note 2018 2017 ASSETS Non-current assets Real estate properties $9,645,596 $8,655,651 Hotel properties 666,078 669,026 Equity-accounted and other fund investments 281,464 280,853 Other assets 285,103 246,440 10,878,241 9,851,970 Current assets Mortgages and loans receivable 10 1,686 27,257 Amounts receivable 76,879 77,227 Prepaid expenses and other 15,551 21,082 Cash 110,401 134,450 204,517 260,016 $11,082,758 $10, 111,986 LIABILITIES AND EQUITY Non-current liabilities Mortgages payable 11 $3,573, 185 $3,440,069 Unsecured debentures 12 597,697 398, 152 Convertible debentures 13 225,936 147,701 Morguard Residential REIT Units 14 417,481 365,438 Deferred income tax liabilities 24 717,943 646,884 6,532,242 4,998,244 Current liabilities Mortgages payable 11 789,516 615,959 Unsecured debentures 12 134,755 Convertible debentures 13 2.063 88,674 Construction financing payable 15 36,476 Loans payable 23 60.309 Accounts payable and accrued liabilities 16 244,670 253,859 Bank indebtedness 17 225,160 49,650 1,321,718 1,179,373 Total liabilities 6,853,960 6,177,617 EQUITY Shareholders' equity 3,431,366 3,082,673 Non-controlling interest 797,432 851,696 Total equity 4,228,798 3,934,369 $11,082,758 $10, 111,986STATEMENTS OF INCOME In thousands of Canadian dollars, except per common share amounts For the years ended December 31 Note 2018 2017 Revenue from real estate properties 19 $841,497 $790,535 Revenue from hotel properties 19 237,938 237,116 Land rent arbitration settlement 28 17,250 Property operating expenses Property operating costs (184,986) (174,440) Utilities (57,160) (52,986) Realty taxes (126,076) (110,644) Hotel operating expenses (180,488) (175,714) Net operating income 547.975 513,867 OTHER REVENUE Management and advisory fees 19 62,096 71,786 Interest and other income 10,947 8,907 Sales of product and land 5,400 5,430 78,443 86,123 EXPENSES Interest 20 210,464 191,965 Property management and corporate 92,665 82,862 Cost of sales of product and land 3,698 3,524 Amortization of hotel properties 6 25,342 26,640 Amortization of capital assets and other 6,518 4,228 Provision for impairment 6 29,668 24,590 368,355 333,809 OTHER INCOME (EXPENSE) Fair value gain, net 21 167,235 139,898 Equity loss from investments (22,654) (10,227) Other income 22 13,424 3,885 158,005 133,556Income before income taxes 416,068 399,737 Provision for income taxes 24 Current 15,216 21,187 Deferred 56,794 34,183 72,010 55,370 Net income for the year $344,058 $344,367 Net income attributable to: Common shareholders $319,851 $310,120 Non-controlling interest 24.207 34,247 $344,058 $344,367 Net income per common share attributable to: Common shareholders - basic and diluted 25 $27.96 $26.10STATEMENTS OF COMPREHENSIVE INCOME In thousands of Canadian dollars For the years ended December 31 Note 2018 2017 Net income for the year $344,058 $344,367 OTHER COMPREHENSIVE INCOME (LOSS) Items that may be reclassified subsequently to net income: Unrealized gain on investments in real estate funds 194 Unrealized foreign currency translation gain (loss) 112,621 (81,432) Gain on interest rate swap agreement 161 665 112,782 (80,573) Deferred income tax recovery 467 2,429 113,249 (78,144) Items that will not be reclassified subsequently to net income: Actuarial loss on defined benefit pension plans 27 (6,721) (2, 174) Deferred income tax recovery 1,796 283 (4,925) (1,891) Other comprehensive income (loss) 108,324 (80,035) Total comprehensive income for the year $452,382 $264,332 Total comprehensive income attributable to: Common shareholders $420,538 $232,383 Non-controlling interest 31,844 31,949 $452,382 $264,332