What does the word capitalize mean?
Capitalized means that an asset account was debited (increased) because the company acquired an asset.
The word capitalize is defined as recording the acquisition of land or building or any other fixed asset by increasing a long-term fixed asset. Or it is an ordinary operating expense to be charged against revenue for the period in which it is incurred.
Need of the capitalize is used to record a cost or expenses on the balance sheet for the purpose of delaying the recognition of the expense and it’s used in corporate accounting to match the timing of cash flows. And capitalizing expenses is beneficial as companies are acquiring new assets with long-term life.
Making a lump-sum asset purchase
Concord Pet Care Clinic paid $210,000 for a group purchase of land, building, and equipment. At the time of the acquisition, the land had a market value of $110,000, the building $88,000, and the equipment $22,000. Journalize the lump-sum purchase of the three assets for a total cost of $210,000, the amount for which the business signed a note payable.
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