Think of buying something on capital as like buying a car. There are payments every month, and your outstanding loan amount counts against your available credit. You still have to pay off the car, but not all at once. Capitalization is slightly different in that there is no one loaning the money up front, but to an organizational budget, it looks more like the loan, while corporate worries about where the money comes from, and if they can meet the payroll next month.
With capitalization, it's quite easy to get oneself into a bind, where last year you bought a huge amount of equipment, this year you fixed the software bottleneck which makes the extra equipment no longer necessary. But, your organization will be paying the depreciation on that now useless equipment until its fully depreciated or you sell it. The first organization I worked at had a seven year depreciation schedule, and everything was worthless by year four. We eventually started buying everything on expense accounts, as it allowed us to adjust to different staff and work levels. But, we were stuck with that depreciation for quite some time.
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