capitalizing


Also found in: Dictionary, Thesaurus, Legal, Idioms.

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.

capitalizing

the process of converting an expense into an equivalent capital sum, carrying forward that expense as a FIXED ASSET in the BALANCE SHEET of a firm rather than writing off that expense as a current cost. Capitalization is applied to expenditure on assets that have been acquired for use in the business for periods in excess of a year and which are not for resale, for example motor vehicles, plant, machinery, equipment, land and buildings, patents, goodwill, trademarks, brands etc.
References in periodicals archive ?
263A cost, it must then determine whether it is currently capitalizing the cost to its Sec.
One hopes that, as the FASB tackles lease accounting, it recognizes that there are many types of leases that reflect truly legitimate business objectives, and that the ultimate goals of more meaningful and useful financial statements, simplicity and cost/benefit may not be achieved by capitalizing all leases without judgment.
So capitalizing His Word seems to be an exception to all the rules.
Finance leaders can't ignore this opportunity and need to develop strategies for capitalizing on the euro.
The agreement allowed the taxpayer to deduct the particular costs, instead of capitalizing them.
in London wrote, "I think you are correct in not capitalizing internet or the web."
Capitalizing remediation expenditures, on the other hand, would distort current period net income and future period net income because there is no relationship between the income-producing activity and discharging the liability for the clean-up expenditure.
The developer would then be required to start capitalizing interest on undeveloped land in the project, according to Connor.
It no longer appears to follow the "reasonable" approach analysis (i.e., it is not passing on adjustments just because a taxpayer is capitalizing a reasonable amount, if the taxpayer is not on a permissible method).
A reader called to say that because he thinks The Newsletter on Newsletters exhibits an impressive command of the English language, he was confused by our practice of not capitalizing internet (and we told him the web, too, for that matter).
The staff also noted that it has taken exception to entities capitalizing certain kinds of start-up costs.
Section 263A(f) of the Code contains special rules for capitalizing interest under certain circumstances.