When we capitalize an asset, it means we are adding to the costs of an asset as opposed to expensing it. Expenditures that improve the quality of an asset are capitalized as part of the cost of the asset. For example, Uncle Joe spends $6,000 cash to improve the efficiency of his equipment. The cost Uncle Joe uses to improve the efficiency of the equipment is an asset as its benefits spans multiple years. The journal entry to recognize this is:

Debit Equipment (an asset) $6,000

Credit Cash $6, 000