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    Dorina's Avatar
    Dorina Posts: 2, Reputation: 1
    New Member
    		  
    #1

    Dec 7, 2007, 11:31 AM
    Capitalize or Expense Costs?
    Hi Everyone,
    I need some help please...

    Think specifically about the costs that a company pays out each day.Some accountants will allow you to capitalize some (if not most) of these items (and only incur amortization expenses year over year) while others will advise you expense them all in the period they are incurred (realizing the whole cost).
    If you had a business and your accountant told you to either expense it all, or to capitalize it all, what would your response be? How short and long term effects of your decision will likely be?

    Thank you so much,
    Dorina
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Dec 7, 2007, 02:07 PM
    You only should capitalize a cost if the cost will benefit the asset fpr a period of more than 1 year.

    For example if you spend money to upgrade a piece of equipment that extends it's useful life then you capitalize the cost.

    If the cost is for routine maintenance then the cost is expensed as incurred.
    Dorina's Avatar
    Dorina Posts: 2, Reputation: 1
    New Member
    		  
    #3

    Dec 7, 2007, 04:55 PM
    Thank you so much.
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