Final answer:
The yearly cleaning of air conditioning filters is categorized as an expense, not capitalization, because it is part of regular maintenance necessary for the current operation of the business and does not increase the value of the asset.
Step-by-step explanation:
The yearly cleaning of the building's air conditioning filters is considered an expense. This is because it falls under the routine maintenance that is necessary for the current operations of the business. Activities such as comprehensive cleaning of air conditioning systems and replacement of filters, while ensuring a healthy environment, are part of the operational costs. These activities are necessary for preventing issues such as the growth of biofilms within cooling towers and maintaining air quality, which is crucial given the costly implications and health factors associated with air cleanliness.
Capitalization, on the other hand, involves the costs that are incurred to acquire or upgrade a physical asset which provides benefits over a long period. Since cleaning and replacing filters are frequent and recurring tasks that do not directly increase the value of the air conditioning system but ensure its proper functioning, they do not qualify as capital expenditures. Moreover, regular maintenance helps companies comply with environmental laws which can be costly, but they ensure clean air and water, which have long-term benefits for society.
Considering the preventive maintenance and its importance in the business strategies for the effective functioning of air conditioners, operational efficiency and compliance with regulations, these maintenance costs are indeed an ongoing expense for organizations.