What method is used to distribute the cost of capital items over the asset's life?

The method used to distribute the cost of capital items over the asset's life is best captured by a depreciation schedule. This approach systematically allocates the cost of a tangible asset over its useful life, reflecting how the asset's value diminishes over time due to usage, wear and tear, or obsolescence.

A depreciation schedule allows businesses to align the expense recognition with the revenue generated by the asset, which is fundamental to the matching principle in accounting. This schedule outlines the periodic expense charges that will occur as the asset contributes to generating income, helping ensure accurate financial reporting and tax calculations. By spreading the cost across several accounting periods, businesses can manage their cash flow more effectively and gain a clearer insight into their asset management.

While amortization is similar and often pertains to intangible assets, in this context, the term specifically refers to the process associated with tangible capital assets, warranting the response focused on the depreciation schedule. The other options, like accrual accounting and budgeting, serve different purposes in accounting and financial planning and do not specifically address the distribution of capital costs over time as effectively as a depreciation schedule does.