Capitalized


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Capitalized

Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year.

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.
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The IRS disallowed the deduction and capitalized the bargain element of the warrants based, in part, on the theory that the differential constituted an expenditure to create a long-term relationship.
The need for additional guidance on capitalization issues
If this threshold is exceeded, all costs must be capitalized.
Capitalizing and amortizing debt issuance costs
The entire purchase price had to be capitalized and depreciated.
Lease termination costs
67-125, the portion of compensation paid to employees in connection with services relating to a reorganization must be capitalized.
INDOPCO and the tax treatment of reorganization costs
Inherently facilitative" costs: Costs listed as "inherently facilitative" are not subject to this exception and must be capitalized, no matter when incurred.
Final regs. on capitalizing transaction costs
In reciting the facts of the case, the Tax Court noted that the company accounted for the acquisition as a purchase, not a pooling, and capitalized the expenditures for book purposes.
Expensing corporate activities
Therefore, the recurring or nonrecurring nature of an expenditure serves as a practical guideline to determine whether an expenditure is to be deducted or capitalized.
Notice 96-7: request for comments on further capitalization guidance
Payments for the development of computer software (although this may be capitalized under other published guidance); and
Final regs. on capitalization of intangibles
Therefore, the court treated the payment as a modification fee to be capitalized and amortized over the life of the new lease.
Lease cancellation expenditures
92-80 (advertising capitalized if "directed towards obtaining future benefits") and Rev.
Emerging post-Indopco issues: rationale and strategies

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