What Does Capitalize Mean? Capitalized vs Non-Capital Costs: Expert Examples and Detailed Explanations
Capitalized costs are not expensed in the period they were incurred but recognized over a period of time via depreciation or amortization. To simplify the decision, GAAP states that purchases must have an expected useful life of more than one year to be considered capital expenditures. Since capitalized costs are usually depreciated or amortized over multiple years, capitalizing a cost means that it will have an impact on profits for multiple reporting periods into the future. However, the related...