Question regarding capitalization accounting
In the process of teaching myself about investing and finance so I can start doing something productive with all the money I've saved instead of leave it sitting in a bank. I've been spending the last year and a half educating myself and putting together what I guess you could say is a bit of a personal investing/economics/finance bible and trading plan. I've learned an enormous amount in a short period of time but being self taught there are still some small gaps (and I'm sure some larger ones too!) in my knowledge here and there. Can you guys weigh in on the following paragraph from my "bible" or whatever you want to call it and let me know if it sounds correct or if certain wordings should be modified please?
"Expenditure accounting: Initially capital expenditures are recorded on the balance sheet as an asset, representing a future benefit. The asset is capitalized on the basis of all costs required to put it into operation (purchase price, delivery, installation, etc.) Once the benefit of the expenditure begins to be realized it is shifted to the income statement and recorded as an expense on a depreciated (or, if it's an intangible asset, amortized) basis. Management discretion regarding the timing of such reclassifications and the rates of depreciating and amortizing expenses can be a source of earnings and cash flow manipulation."
Close enough
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