Anthony McVeigh •
A common struggle many face is knowing when they should capitalize a cost or expense it. I am here to help! The rule of thumb for determining what should be capitalized is how long the item will be useful to you. If the item is expected to provide short-term benefits (less than a year) such as inventory, then it must be expensed in the period incurred. You capitalize an item when you expect it to provide you with long term benefits (greater than one year). In this case you capitalize and depreciate or amortize over the useful life of the asset.
A common struggle many face is knowing when they should capitalize a cost or expense it. I am here to help! The rule of thumb for determining what should be capitalized is how long the item will be useful to you. If the item is expected to provide short-term benefits (less than a year) such as inventory, then it must be expensed in the period incurred. You capitalize an item when you expect it to provide you with long term benefits (greater than one year). In this case you capitalize and depreciate or amortize over the useful life of the asset.