Expense Capitalization: An Overview of Forex Trading

5 min read

Expense capitalization is an accounting term that refers to the process of recognizing costs associated with long-term assets as expenses over the projected life of the asset, rather than allocating the entire cost as an immediate expense. This helps to increase the value of the asset in the present day and can be helpful for entities that use capitalization as a way to finance their operations. Furthermore, expense capitalization is widely used in the foreign exchange (forex) market, where traders need to capitalize on the currency exchange rate fluctuations in order to capitalize on potential gains.