Quick Finance Tip - Recognizing Capitalized Expenditures

​Capitalized Expenditures increases Assets on the Balance Sheet and appears as Investing Cash Flow on the Cash Flow Statement. Company allocates the amount over the useful life as depreciation/amortization expense, which reduces profit on the Income Statement (non-cash expense on the Income Statement) and reduces the carrying amount on the Balance Sheet.

​When the asset does not meet asset recognition requirements, the expenditure is treated as an expense on the Income Statement, reducing Net Income, which reduces Operating Cash Flow. No assets are recorded.