Capitalization
In accounting, capitalization means recording a cost as an asset rather than an expense because it brings a future benefit — then allocated to expense over that benefit.
- Layer
- Lexicon
- Defined in
- Lexicon
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Authority
This definition follows ASC 360-10-30.
Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.
Capitalization, in use
Quoted from the document that use the word — what it does to an interface, in the spec's own sentence.
A capitalization schedule should therefore record the date the threshold was met, not a stage.
Schedules, accruals & roll-forwards — 6. Intangibles and amortization
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
- How to account for SAFEs on your balance sheetA SAFE is cash today and shares later. Why it usually sits with liabilities, how the cap and discount set conversion, and what to book at the priced round.
- US GAAP for early-stage startups, in plain EnglishAccrual accounting, revenue recognition (ASC 606), leases (ASC 842), stock compensation and capitalized software: what each means for a small company.
What it is not called
Each of these is a real word for a different thing. Using it here is what makes a product read as though it was built by someone who has not done the work.
- capitalising for financing
- capex
Nearby in the catalog
No component names this concept outright. These are the ones in its part of the system, which is a weaker claim — but a component nothing links to is a component nobody finds.
6Statements
Family specTerms this one depends on
Also in Fixed assets & leases
Work with this concept
The calculators that compute it and the ledger payloads that carry it. A definition is where a reader starts; these are where they go next.
- Journal entry for an equipment purchaseWhen equipment is bought, debit the fixed asset account for its full cost — price plus delivery and installation — and credit Cash or Accounts payable. Nothing is expensed on the day of purchase; the cost reaches the P&L as depreciation.Entry
- Journal entry for capitalized softwareCapitalize qualifying development cost by debiting Capitalized software and crediting the expense it was first booked to (usually wages). Once the software is ready for use, debit Amortization expense and credit Accumulated amortization each month over its useful life.Entry
Defined in Lexicon. This page is generated from that document, so the two cannot disagree.