Capitalize in Accounting

- An item is capitalized when it is recorded as an asset, rather than an expense

- The expenditure will appear on the balance sheet rather than in income statement

When to capitalize

- Asset Has a Useful Life of at Least One Year

- Asset Exceeds Capitalization Limit

When an asset has a useful life of just a few months, it may be more efficient to simply record it as a
prepaid expense (a short-term asset), and then charge it to expense at a steady pace over its life.