Asset capitalization journal entry is an accounting process for recording the acquisition costs of long-term physical assets such as buildings, equipment, and other durable items. These entries are recorded in the asset accounts to accurately reflect the true cost of the asset, as well as its depreciation going forward. The resulting capitalized cost then becomes the basis upon which ongoing activity such as depreciation and impairment are calculated. In a nutshell, asset capitalization journal entries provide an important and accurate financial record of an organization’s long-term investments in physical assets.