capitalize

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Capitalize

In accounting, to recognize expenses on long-term liabilities over a long period of time. This allows a company to spread out its expenses so they do not appear to reduce profits at any particular time. For example, a company may have a $1 million profit and a $1 million loan to acquire machinery for its factory. If it does not capitalize the loan, its balance sheet will show no profit for that year. Capitalizing the loan allows the company to recognize the liability over a certain period, usually the usable life of the machinery.

capitalize

To calculate the current value of a future stream of earnings or cash flows. For example, to calculate the current price at which a bond should sell, a financial analyst must capitalize the interest payments and principal repayment that will be made to the investor.

capitalize

(1) In finance:(a) To add an expenditure to the basis of property.(b) To provide funding to an enterprise. (c) To book something as an asset and depreciate it rather than writing off the money spent as an expense.(When one “cooks the books”for a business,extensive repairs might be capitalized as improvements in order to make the enterprise appear more valuable than it is in reality.This approach runs counter to the normal taxpayer desire to treat all repairs as expenses in order to gain maximum tax deductions in the current year.) (2) In appraisal,to estimate the present value of an income stream from a business or property.

Capitalize

To treat the cost of additions and improvements to property as a capital improvement or expenditure.
References in periodicals archive ?
identifying the capitalizable costs within a broad range of costs in a
This final restriction is superfluous if capitalizable interest is strictly computed as avoidable interest.
The Second Circuit affirmed the Tax Court's determination that the tax stamps were capitalizable indirect costs under Sec.
The announcement states that the Tax Court correctly held that Robinson incurred the royalty expenses by reason of its production activities and that the expenses were capitalizable.
99-23 addresses only the applicability of section 195 to costs incurred in connection with a new trade or business unrelated to the taxpayer's existing business, many read the ruling as establishing a general capitalization principle distinguishing between deductible investigatory costs and capitalizable acquisition costs.
Pero los abogados de ASA afirman que, anos despues, descubrieron que Cervantes Campos, exfuncionario de Bancomer, habia alterado el contrato original al desaparecer hojas y anadir un parrafo que reza: Los intereses moratorios seran capitalizables en base al articulo 363 del Codigo de Comercio.
As stated above, time spent on development is capitalizable.
Por su parte, la Secretaria de la Contraloria y Desarrollo Administrativo (Secodam) investiga mas irregularidades y presuntos actos de corrupcion cometidos por Alfredo Aguilar Lopez de Nava, gerente de Obras y Mantenimiento Capitalizable de Pemex-Refinacion, quien ya fue acusado de malversacion de fondos por casi 400 millones de pesos en la construccion de la refineria de Cadereyta (Proceso 1281).
A nonroutine estimate might include the treatment of certain expenditures as current deduction when it would be impractical to segregate the capitalizable and noncapitalizable amounts.
Once the taxpayer has determined the unit of property, the next step is to determine whether an expenditure for the unit of property is a deductible repair or a capitalizable improvement.
To be SOX-compliant, management must have an effective process in place to accurately record and report related expenses or capitalizable costs in the proper period and to ensure disclosure of significant events.
When evaluating the acquisition of another business, the issue becomes not only whether the expenditure is deductible rather than capitalizable but also whether it will reduce taxable income at all.