Capitalization
This query is : Resolved
03 July 2013
What is capitalization pls explain.
03 July 2013
Capitalization is the recordation of a cost as an asset, rather than charging to Profit & Loss Account as an expense. Capitalization is used when a cost is not expected to be entirely consumed in the current period, but rather provide benefit over an extended period of time. For example, stationaries are expected to be consumed in the near future, so they are charged to to Profit & Loss Account as an expense at once, while an Vehicle or Plant & Machinery is recorded/capitalized as a fixed asset and charged to Profit & Loss Account as depreciation over a much longer period.
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