Journal entry for capitalization of an asset is the accounting transaction used to record the acquisition or creation of an asset that has a useful life in excess of one year. This entry records the pricing and description of the asset, and credits the appropriate asset account while debiting the funds available or spendable by the company. Capitalizing an asset is important because it ensures that companies are properly recognizing their long-term investments in assets, which accurately reflects the financial health of the organization. It also allows for tracking of depreciation of those assets over time.