When a company makes an expenditure that is neither a payment to a creditor nor a distribution

Question:

When a company makes an expenditure that is neither a payment to a creditor nor a to an owner, management must decide if the expenditure should be capitalized (recorded as an increase in an asset) or expensed (recorded as an expense thereby decreasing owners’ equity).

Required:
1. Which factor or factors should the company consider when making this decision?
2. Which key accounting principle is involved?
3. Are there any constraints that could cause the company to alter its decision?

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...