NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Investment Properties Purchase Accounting Allocation (Dollars in thousands, except share and per share amounts and where indicated as in millions or billions) We record investment properties at cost. Investment properties include costs of acquisitions; development, predevelopment,  and construction (including allocable salaries and related benefits); tenant allowances and improvements; and interest and real  estate taxes incurred during construction. We capitalize improvements and replacements from repair and maintenance when the  repair and maintenance extends the useful life, increases capacity, or improves the efficiency of the asset. All other repair and  maintenance items are expensed as incurred. We capitalize interest on projects during periods of construction until the projects  are ready for their intended purpose based on interest rates in place during the construction period. The amount of interest  capitalized during each year is as follows: We record depreciation on buildings and improvements utilizing the straight-line method over an estimated original useful life,  which is generally 10 to 40 years. We review depreciable lives of investment properties periodically and we make adjustments  when necessary to reflect a shorter economic life. We amortize tenant allowances, tenant inducements and tenant improvements  utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter. We record depreciation  on equipment and fixtures utilizing the straight-line method over seven to ten years. We review investment properties for impairment on a property-by-property basis whenever events or changes in circumstances  indicate that the carrying value of investment properties may not be recoverable. These circumstances include, but are not limited  to, declines in a property’s cash flows, ending occupancy or total sales per square foot. We measure any impairment of investment  property when the estimated undiscounted operating income before depreciation and amortization plus its residual value is less  than the carrying value of the property. To the extent impairment has occurred, we charge to income the excess of carrying value  of the property over its estimated fair value. We estimate fair value using unobservable data such as operating income, estimated  capitalization rates, or multiples, leasing prospects and local market information. We may decide to sell properties that are held  for use and the sale prices of these properties may differ from their carrying values. We also review our investments including  investments in unconsolidated entities if events or circumstances change indicating that the carrying amount of our investments  may not be recoverable. We will record an impairment charge if we determine that a decline in the fair value of the investments  is other-than-temporary. Changes in economic and operating conditions that occur subsequent to our review of recoverability of  investment property and other assets could impact the assumptions used in that assessment and could result in future charges  to earnings if assumptions regarding those investments differ from actual results. We allocate the purchase price of acquisitions to the various components of the acquisition based upon the fair value of each  component which may be derived from various observable or unobservable inputs and assumptions. Also, we may utilize third  party valuation specialists. These components typically include buildings, land and intangibles related to in-place leases and we  estimate: Amounts allocated to building are depreciated over the estimated remaining life of the acquired building or related  improvements. We amortize amounts allocated to tenant improvements, in-place lease assets and other lease-related intangibles  over the remaining life of the underlying leases. We also estimate the value of other acquired intangible assets, if any, which are  amortized over the remaining life of the underlying related intangibles. ● the fair value of land and related improvements and buildings on an as-if-vacant basis, ● the market value of in-place leases based upon our best estimate of current market rents and amortize the resulting  market rent adjustment into revenues, ● the value of costs to obtain tenants, including tenant allowances and improvements and leasing commissions, and ● the value of revenue and recovery of costs foregone during a reasonable lease-up period, as if the space was vacant. 38 Simon Property Group, Inc. For the Year Ended December 31, 2011 2010 2009 Capitalized interest  $ 5,815 $ 3,715 $14,502