Capital
expenditure is the money spent to upgrade or acquire tangible assets such as
buildings, machinery, furniture, computer equipments etc. with a useful life extending
beyond a taxable year. It is also called capital expense or capital spending. Purchasing
a car is an example of capital spending.
A capital expenditure
is incurred when a business spends money either to buy fixed assets or to add
to the value of an existing fixed asset with a useful life that extends beyond
the taxable year. Capex are used by a company to acquire or upgrade physical
assets such as equipment, property, or industrial buildings. In accounting, a
capital expenditure is added to an asset account ("capitalized"),
thus increasing the asset's basis (the cost or value of an asset as adjusted
for tax purposes). Capex is commonly found on the Cash Flow Statement as "Investment in Plant Property and
Equipment" or something similar in the Investing subsection.
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