A capitalized cost is an expense added to the cost basis of a fixed asset on a company's balance sheet. ... Capitalized costs are not expensed in the period they were incurred but recognized over a period of time via depreciation or amortization.

What is capitalized vs expense?

When a cost that is incurred will have been used, consumed or expired in a year or less, it is typically considered an expense. Conversely, if a cost or purchase will last beyond a year and will continue to have economic value in the future, then it is typically capitalized.

Is capitalized interest an expense?

Capitalized interest is the cost of borrowing to obtain a long-term asset. Unlike typical interest expenses, capitalized interest is not expensed immediately on a company's income statement.