What does it mean to “capitalize” a cost and how does that compare to “expensing” the cost?

Expert Solution

CAPITALISE MEANS ADDING ALL THE COSTS INCURRED TO THE DEBIT OF ASSETS WHICH ENHANCE THE LIFE OR USEFULNESS OF THE ASSETS AND WILL CONTINUE TO PROVIDE ECONOMIC INFLOW FOR MORE THAN ONE ACCOUNTING PERIOD.

EXAMPLE: COST INCURRED ON INSTALLATION OR MAKING ASSET READY TO USE, THESE COST ARE CAPITALISED.

EXPENSING MEANS COST INCURRED ON ASSET TO CONTINUE THE OPERATIONAL USAGE OF THE ASSETS AND WHICH ARE GOING TO PROVIDE ECONOMIC BENEFIT DURING THE PARTICULAR ACCOUNTING PERIOD ONLY.

EXAMPLE: REPAIRS OF THE MACHINERY WHICH ARE MINOR IN NATURE AND ARE NOT GOING TO ENHANCE EFFICIENCY OF AN ASSET, THESE COSTS ARE EXPENSED OFF IN THE PERIOD INCURRED.

ekkarill92 answered 2 years ago

What does it mean to ‘capitalize an expense’?

What does it mean to ‘capitalize an expense’?a. To report an expense in the capital expenditures account.b. To spread a liability balance over a period of years.c. To report the whole expense of a major investment in the time period when it was purchased.d. To record the cost as an asset, then record a depreciation expense over a period of years that accumulates to the purchase cost to offset that asset balance.

a) How does the mean of any sampling mean distribution compare to the population mean? b)...

a) How does the mean of any sampling mean distribution compare to the population mean? b) Explain what happens to the spread of the sample mean distribution as the sample size increases based on the results observed in this lab.

If the residual positive, what does that mean and how does it compare with the line of best fit? What about if the residual is negative?

If the residual positive, what does that mean and how does it compare with the line of best fit? What about if the residual is negative?a) What does it mean if the residual is close to 0? What if the residual isn't close to 0?b) How would each of these residuals appear in a scatter plot?

Question

What does it mean to “capitalize” a cost and how does that compare to “expensing” the cost?

Solutions

Expert Solution

Related Solutions

What does it mean to ‘capitalize an expense’?

a) How does the mean of any sampling mean distribution compare to the population mean? b)...

If the residual positive, what does that mean and how does it compare with the line of best fit? What about if the residual is negative?

What does the Cost vs Benefit constraint mean in the US GAAP framework? How does it...

1. compare and contrast the two forms of city government. what does incorporation mean and how...

What does the concept of “opportunity cost” mean?

What does it mean when a cost-capacity factor is less than 1? What does it mean...

What does ABC stand for in accounting and what does it mean and how is it...

What does independence mean in an auditing context? Compare and contrast in fact and in appearance,...

What is a factorial ANOVA? How does this compare to an ANOVA? What is the research...