What does Capitalise Mean in Accounting?

Capitalise or Capitalize means in accounting to convert any revenue expenditure into capital nature expenditure. This is the simple definition of capitalise in accounting. When a expenditure is done in company. Company accountant has to decided whether it will be shown as expenses in profit and loss account or it will be shown as asset in company's balance sheet. The decision is taken on the basis time of benefits of expenditures. If any expenditure is providing benefits more than one year, accountant can include that expenditure and capital expenditure. But some time revenue expenditure may capitalise as asset of company on the following basis

1. Company is small company

If company is small company and company has purchased a mouse for computer. Its small amount may add in the machinery of company.

2. Part of Fixed Asset

Sometime, it may possible that company purchases part of any fixed asset. Even that part's value is very low but due to this is important part of that fixed asset. So, this expenditure will include in that fixed asset and depreciation will be charged on that fixed asset up to the life of that fixed asset.