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I got my accounting degree, passed the CPA exam, and have worked in accounting for 5.5 years. I’ve always thought that to capitalize means to recognize an item on the balance sheet, be it asset, liability, or equity, long term or short term, tangible or intangible, skinny or fat, whatever.
But someone at work said I am wrong. That person said you only capitalize fixed assets.
I was briefly a cost accountant, and I remember there was an entry to capitalize manufacturing variances to the inventory account. Inventory is not fixed asset for sure.
What do you think? What does capitalize really mean in accounting?
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