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# Cost capitalization

Capitalizing software development costs in accordance with SOP 98-1 guidelines is simplified with PPM. This section provide details on how to enable cost capitalization and how PPM capitalizes costs.

In this topic:

## Enable cost capitalization

To track capital cost for a project, cost capitalization should be enabled, first at the system level, and then at the project level.

Note: In PPM, cost capitalization is also available for proposals and assets, although for the SOP 98-1 tracking purpose, it is primarily applicable to projects.

1. To enable cost capitalization in the system level, your administrator should set the `COST_CAPITALIZATION_ENABLED` to `true`.

   For details, see the COST_CAPITALIZATION_ENABLED parameter in Server parameters.

2. To enable cost capitalization in the project level, see Financial Management settings.

   If needed, you can also enable cost capitalization for proposals, assets, and programs. For details, see Configure financial summary settings.

## How PPM capitalizes costs

When cost capitalization is enabled, PPM uses either activities or the cost property "Expense Type" to categorizes cost into capital cost, as opposed to operating cost.

Activity | Applicable to cost rolled up from time sheets and work plans. The cost of a task that is associated with a capitalized activity is treated as capital cost. For details, see Use activities to track capital costs.
Expense Type | Applicable to cost lines that you manually add in the financial summary. The cost in the cost lines that have the property "Expense Type" set to "Capital" is treated as capital cost. For details, see Cost Properties.

https://admhelp.microfocus.com PPM 8942
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