Investing Activities
Securities investments
Investments in stocks and bonds of other firms
Long-lived operating assets
Investments in tangible and intangible assets
Management judgment
Opportunity for earnings management in deciding whether to expense or capitalize costs
Capitalization
Recording long-term beneficial expenditures as assets on the balance sheet
Book value
Remaining value of an asset on the balance sheet
Expenditures for Improvements
Additional expenditures to add to or improve long-lived operating assets
Externally acquired R&D
Capitalization of purchased patents or licenses for R&D
Interest Incurred to Self-Constructed Assets
Capitalizing interest costs on debt used to finance asset construction
Technological feasibility
Completion of detailed program design or working model for software development
Accounting for Software Development Costs
Expense recognition for developing computer software until 'technological feasibility'
Repairs & maintenance expenditures
Expense recognition for maintaining the originally expected service potential
Depreciation
Expense recognition for the subsequent use of a long-term tangible asset
Investing activities
Firm's effective use of financing proceeds to generate returns
R&D Expenditure
Immediate expense recognition for internally incurred R&D costs
Immediate expense
Treating a cost as an expense with no asset creation