When a company makes expenditure; it can either capitalize or expense the cost, depending on the nature of the expenditure. What does it mean to capitalize expenditure? What determines whether expenditure can be capitalized?

When a company makes expenditure; it can either capitalize or expense the cost, depending on the nature of the expenditure. What does it mean to capitalize expenditure? What determines whether expenditure can be capitalized?
Answer
The expenditures made by the company in a given period of time can either be expense out or capitalized in that period. Capitalization of the expenditures means that the company is deferring the charging of the amount of the expense over a period of time. The main reason behind the capitalization of the expenditure is that the benefits associated with that expenditure is expected to be obtain over a certain period of time and on the basis of the matching principle, the expenses are charged to the period over which the revenue is generated by using that asset. The most famous example of the capitalization of the expenses is fixed assets and research & development expenses