Gary LivakChapter 7 SummaryThis chapter focuses on aggressive cost capitalization and extended amortization policies. Based on the matching principle costs incurred that benefit future periods should be capitalized and amortized to expense over the periods that benefit. That is the correct way for acompany to capitalize items and provide themselves with considerable accounting flexibility. A few examples of some costs that can be capitalized are:1.Software development costs2.Capitalized interest3.Direct-response advertising4.Policy acquisition costsA few examples of some costs that should not be capitalized are:1.Start-up activities2.Research and development3.Advertising and selling4.General and administrative expensesThe SEC has begun cracking down on companies that over aggressively capitalize assets. The following 4 ways are used in detecting aggressive capitalization policies:1.Carefully consider a company’s capitalization policy2.