When purchasing equipment and machinery, costs that can be capitalized include the purchase price and any associated costs necessary to get the asset ready for its intended use. This typically encompasses the shipping or freight costs incurred to transport the equipment to its location. Capitalizing these costs means that they are added to the asset's value on the balance sheet rather than being recorded as immediate expenses in the income statement. This practice aligns with the principle of matching costs with revenues, as these costs will contribute to the asset’s operational capability over its useful life.
In contrast, training staff on equipment usage is considered an operational expense and is thus recognized as an expense in the period incurred. Property taxes, while a necessary cost of ownership, are generally treated as period expenses and not capitalized as part of the asset's cost. Repair costs incurred after the asset has already been placed in service are also classified as operating expenses, as these are costs associated with maintaining the asset rather than preparing it for use initially.