Respuesta :
In dealing with capitalized costs, consider the employers as fraud should be done when deferred charges of interest exist on the balance sheet.
A fixed asset's cost base on a company's balance sheet is increased by an expense known as a capitalized cost. Fixed asset construction or acquisition involves capitalized costs. Capitalized expenses are recognized over time through depreciation or amortization rather than being expensed in the period in which they were incurred. When costs are capitalized, the money doesn't leave the business when an item is bought; instead, it is kept as a fixed or intangible asset. Capitalized costs are not immediately expensed; instead, they are depreciated or amortized over time. To better align the cost of using an asset with the period of time during which the asset is producing income, costs are capitalized. A business adheres to the matching principle of accounting when capitalizing costs. According to the matching principle, expenses should be recorded at the same time as associated income. In other words, rather than looking at when the initial expense was incurred, the objective is to match the cost of an asset to the periods in which it is used and so generating revenue. Long-term investments will continue to generate income for the duration of their useful lives.
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