Capitalizing Expenditures

Certain kinds of expenditures may at the option of the company be treated either as current expenses or capital expense. In the latter case the expenditure appears 0n the balance sheet as an asset, which is generally written gradually over a period of years. Examples of such expenditure, intangible drilling costs of oil concerns, development expense of mines, research and development (R&D) expense of manufacturing, hiring companies, organization expense, expense of floating bond and stock issues, etc. In many such cases the full amounts are deducted immediately for income tax purposes but they are capitalized (and then gradually written off) in the reports to stockholders.