Capitalized vs. expensed

The difference between capitalized and expensed is that capitalized refers to the method of treatment in terms of an asset or cost as a long-term investment instead of a current expense, while expensed refers to the treatment method of an asset as a current expense instead of a long-term investment.

Capitalizing an asset means you record that asset as an investment on an organization's balance sheet. Then, over a certain period, it becomes recognized as an expense. This usually happens because of depreciation or amortization. This practice is often done when the asset or cost is expected to yield long-term benefits.