Learn how some expenditures are expensed immediately and some are capitalized, or put on the balance sheet and expensed over time. It depends on management’s assessment of the likelihood of future benefit.
- You may have heard the…phrase we'll capitalize those costs.…What the devil does that mean?…- The term capitalize has a very specific meaning…when it comes to accounting and to the financial statements.…Capitalize means that we believe…an expenditures going to benefit more than one period.…More than one year for example.…- If that's the case then the cost…of that expenditure should be spread out over…the time periods that are expected to be benefited.…So capitalize means to record the expenditure…as an asset on the balance sheet…and then expense that asset…to the income statement over time.…
- As opposed to just running the expenditure…to the income statement immediately as an expense.…So the choice is do we capitalize or do we expense?…Do we put the expenditure on the balance sheet…and as an asset and move it…to the income statement in pieces over time?…Or do we just run it to the income statement immediately?…- [Instructor] Well that sounds kind of easy.…If a cost benefits just this period,…then it goes to the income statement this period.…
Skill Level Beginner
Q: Why can't I earn a Certificate of Completion for this course?
A: We publish a new tutorial or tutorials for this course on a regular basis. We are unable to offer a Certificate of Completion because it is an ever-evolving course that is not designed to be completed. Check back often for new movies.