Accounting Terms Dictionary

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To capitalize means to expense the cost of an asset over a period of years.

If I bought a computer for $5000 and deducted $1000 of the cost of the computer every year for five years, we would say I capitalized the computer. In contrast, if I bought that $5000 computer and deducted the entire $5000 during the year of purchase, I would say I expensed the computer.

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