COST CAPITALIZATION OR EXPENSE RECOGNITION: RATIONALE FOR SELECTION
Business owners have to make a lot of accounting decisions, and what an enterprise does with costs is one of the most important such decisions. When businesses spend money, they either account for it as a period expense or capitalize it as part of the value of identifiable assets. Any of these decisions has an impact on the financial condition of the enterprise. This study is devoted to the definition of capitalization and situations in which it is appropriate to recognize the funds spent as expenses of the period. The impact of this method on the financial statements and the limitations associated with any of these methods are also considered. In addition, the conditions of improper use of systems and ensuring compliance of business accounting with the legal framework are considered.