- /kaepatabzeyshan/ Capitalization represents the total amount of the various securities issued by a corporation.Capitalization may include bonds, debentures, preferred and common stock and surplus. Bonds and debentures are usually carried on the books of the issuing company in terms of their par or face value. Preferred and common shares may be carried in terms of par or stated value. Stated value may be an arbitrary figure decided upon by the directors or it may represent the amount received by the company from the sale of the securities at the time of issuance. To record an expenditure that may benefit a future period as an asset rather than to treat the expenditure as an expense of the period of its occurrence.See capitalize@ capitalization accounting methodA method of determining the present value of an asset that is expected to produce a stream of future benefits. This involves discounting the stream of expected future benefits at an appropriate rate. A method of measuring values of realty for purpose of determining values of mortgages by expertly estimating the gross income which property should realize, and separately the expenses reasonably required to carry it, and thus arriving at a fair estimate of net income and using a capitalization figure or factor, expertly chosen. Depreciation must be taken into consideration in use of such method. In re New York Title & Mortgage Co. (Series B-K), 21 N.Y.S.2d 575, 594, 595@ capitalization rateThe rate of interest used in calculating the present value of future periodic payments@ capitalizeTo convert periodic payments into an equivalent sum or sum in hand. To compute the present value of income extended over a period of time. To record an expenditure as an asset when the expenditure benefits a period in excess of one year. An example includes improvements to a commercial building. The cost of the improvements is recorded as an asset on the balance sheet and written off over the estimated useful life of the improvement@
Black's law dictionary. HENRY CAMPBELL BLACK, M. A.. 1990.