Final answer:
If a cost is capitalized, it is recorded as an asset, which appears on the asset side of a balance sheet and is depreciated or amortized over time.
Step-by-step explanation:
If a cost is capitalized, it is recorded as an asset, not an expense. The correct answer to the question is 'a. Asset'.
When a cost is capitalized, it means the expense is considered an investment in the future rather than a cost of doing business in the present. Capitalizing an expense essentially spreads the cost of an asset over its useful life. This approach is reflected on a company's balance sheet using a T-account, where the capitalized cost is added to the asset side of the ledger.
Unlike assets, expenses are fully recognized in the income statement in the period they are incurred. Capitalized costs will instead appear on the balance sheet and are typically subjected to depreciation or amortization over time, depending on the nature of the asset.