Explanation:

- Legacies, often given as endowments or donations to organizations, are treated in specific ways in accounting.

- Option 1: Capitalized and taken to Balance Sheet - Correct. Legacies are typically considered capital receipts. They are capitalized, as they represent enduring funds or assets, and are thus recorded on the balance sheet.

- Option 2: Treated as income - Recognizing legacies as regular income is not standard as they are not typical operational revenue.

- Option 3: Treated as expenditure - Incorrect; legacies are essentially income, not an outflow.

- Option 4: Capitalized and taken to Suspense Account - Generally not correct, as suspense accounts are temporary holding accounts for unclear items.