Final answer:
An expenditure must create or relate to a "separate and distinct asset" to be subject to capitalization. True.
Step-by-step explanation:
True. In order for an expenditure to be subject to capitalization, it must create or relate to a "separate and distinct asset". This means that the expenditure should contribute to the creation or improvement of an identifiable asset that has a useful life beyond the current period. For example, if a company spends money on constructing a new building, the expenditure would be subject to capitalization because it creates a separate and distinct asset in the form of the building.