Capitalized Cost

Capitalized costs are those expenses that are incurred in building or financing

 a fixed asset. Examples of capitalized costs include labor expenses incurred in 

building a fixed asset or interest expenses incurred as a result of financing the

 construction of a fixed asset. For accountingpurposes, those expenses are

 capitalized, or added to the cost of the asset. They are not deducted from 

revenue in the period in which they were incurred. Instead, capitalized costs 

are deducted from revenues over time through depreciation, depletion,

 or amortization.