To classify a cost as a long-term investment, rather than charging it to current operations. A capitalized cost does not appear on the income statement, but instead appears as a debit on the long-term assets account and a credit on the cash account of the balance sheet. However, the depreciation expense related to the capitalized cost will appear as an expense on the income statement. Since the long-term assets account is larger due to the effect of capitalization, the depreciation costs are also proportionately larger. Thus, the timing of expense recognition is changed, but eventually all expenses do get recognized on the income statement.

Use capitalize in a sentence

We could now capitalize on the turnover and score our own goal that would put us ahead by one goal.

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We decided to capitalize the property plant and machinery as it was going to be in our inventory for a long time.

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When my boss and I were preparing our company's financial statements, he told me the board of directors had decided to add our legacy asbestos costs as a long-term cost and to capitalize those amounts.

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