Capitalized expenses are costs that are added to the value of a fixed asset rather than being treated as an immediate expense. These costs become part of the asset's value and are depreciated over the asset's useful life.

Let's analyze each option:

Installation expenses: These are costs incurred to make an asset ready for use. They are capitalized because they are necessary to bring the asset to its intended condition.

Provision for doubtful debts: This is an accounting estimate for potential bad debts and represents an expense, not a cost that adds value to any asset. It is not capitalized.

Custom duty: When paid on imported machinery or equipment, custom duty is part of the acquisition cost and is capitalized as it directly contributes to the asset's value.

Transportation expenses: Costs to transport an asset to its location of use are considered part of the asset's cost and are capitalized.

Final Answer: Installation expenses, Custom duty, and Transportation expenses are capitalized. Provision for doubtful debts is not capitalized.

Related Topics

Capital Expenditure vs Revenue Expenditure: Capital expenditures (CAPEX) are costs that provide benefits over multiple periods and are capitalized. Revenue expenditures (OPEX) provide benefits only in the current period and are expensed immediately.

Asset Valuation: The process of determining the appropriate value of assets on the balance sheet, including all costs necessary to bring the asset to its usable condition.

Key Formulae

Cost of Asset = Purchase Price + Capitalized Expenses

Where Capitalized Expenses include: Transportation, Installation, Custom Duty, and other directly attributable costs

Annual Depreciation = (Total Capitalized Cost - Salvage Value) ÷ Useful Life