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 ?
This has become is a must for us, so that come game time our offensive personnel will recognize and capitalize on anything the defense gives us.
The Capitalize Albany unitiative started in March 1994 with the city's appointment of the Capitalize Albany Advisory Committee.
If it could ever, conceivably, be printed at the top of a page as the title of something, capitalize it: I will expect your Report promptly.
The FASB's mandate that under certain conditions enterprises must capitalize interest was based on the board's belief that the cost of an asset should include all necessary cost incurred to get the asset ready for its intended use.
Because the taxpayer is not required to capitalize its selling and marketing employee bonuses, the Sec.
Therefore the company had to capitalize the payment, not deduct it.
[section] 1.263(a)-4(c) requires taxpayers to capitalize costs incurred in connection with the acquisition of a laundry list of intangibles, including, for example, an ownership interest in a corporation, partnership, or LLC; a variety of financial interests and products; insurance and annuity contracts; leases; patents and copyrights; as well as both "customer-based" and "supplier-based" intangibles.
So I remained what I wrote in that article--"probably the only person in America who doesn't capitalize internet."
If instead of developing the software, a taxpayer purchases HTML files designed by someone else, the taxpayer must capitalize the costs (assuming a useful life that exceeds one year and the development was not at the taxpayer's risk).
Isachsen the founder and head of the Institute for Management and Development, says that by identifying your particular style, you can capitalize on your natural strengths and achieve great success.
ITW's attempt to deduct payment of the contingent liability conflicted with the well-established principle that a company must capitalize the total cost, including contingencies, it incurs to acquire assets.
The internet's global reach means companies can capitalize on business opportunities anywhere in the world more efficiently, without increasing IT costs or creating yet more fragmented business information.