A journal entry to capitalize an asset is a transaction which, when approved, records the increase in the value of an asset on the balance sheet. Put simply, it’s the process of entering into the books an asset purchased at a cost amounting to more than the minimal amount required to be paid up-front. Capitalizing an asset effectively transforms it from a current liability to long-term ownership and allows for daily organization use beyond its initial payment. The goal is for businesses to maximize their returns on necessary investments, allowing them to stay competitive in the market and continue growing as necessary. With thoughtful consideration, journal entries to capitalize assets can help organizations reach their financial objectives.