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 ?
* Product & Enablers: discretionary capitalizable costs include investments (i) required to support, maintain, launch or innovate in new customer products, and (ii) in infrastructure, which drive operational efficiency over the long term
identifying the capitalizable costs within a broad range of costs in a
* A capitalizable improvement to property is also now more precisely defined, mainly as expenditures that result in a betterment, adapt the property to a new or different use, or restore it to working order or like-new condition after the end of its depreciation class life (the BAR tests).
(64) The proposed regulations reflect this exclusion (65) and, in an effort to address the complexity of determining the appreciation in value of land sold as part of a construction project, the proposed regulations introduce a land safe harbor whereby DPGR is reduced by land costs (including costs capitalizable to the land) plus a certain percentage.
(The court did note, however, that an otherwise deductible expense could be capitalizable if it is part of an overall plan of general improvement).
Accounting Issue IASC Accounting for Leases Determination of capital or operating leases is more subjective depending on the transaction's "substance." Accounting for Development Costs Expense research costs us incurred; however, development costs are capitalizable if certain criteria are met.
A diferencia de permanecer, que depende del esfuerzo personal y no es politicamente capitalizable, ingresar se disfraza de causa popular y genera demagogia (libertad, gratuidad, pase automatico).
Specific interest payments are matched with specific construction expenditures, and detailed information about the underlying debt contracts is necessary to calculate the capitalizable interest.
A qualified taxpayer must include the capitalizable portion of any expenditures under the remodel/refresh safe harbor in general asset accounts going forward and must make retroactive general asset account elections to include the cost of the original building and improvements incurred in years prior to the safe harbor.
Other schemes used were to capitalize 1) manufacturing expenses that exceeded a budgeted amount, 2) the net effect of the impact of sales shortfalls on profits, and 3) internal and external information technology costs that are not properly capitalizable.
En eso reside el valor capitalizable de la legalidad, lo cual tiene implicaciones multiples.
In determining whether a cost was a capitalizable improvement, the 2006 proposed regulations began with an initial unit of property determination of all components that are functionally interdependent to define the largest unit of property as a starting point for the analysis.