Capital expenditure
From Wikipedia, the free encyclopedia
Capital expenditures ("CAPEX") are expenditures used by a company to acquire or upgrade physical assets such as equipment, property, industrial buildings. In accounting, a capital expenditure is added to an asset account (i.e. capitalized), thus increasing the asset's basis (i.e. the cost or value of an asset as adjusted for tax purposes).
An ongoing question of the accounting of any company is whether certain expenses should be capitalized or expensed. Costs that are expensed in a particular month simply appear on the financial statement as a cost that was incurred that month. Costs that are capitalized, however, are amortized over multiple years. Most ordinary business expenses are clearly either expensable or capitalizable, but some expenses could be treated either way, according to the preference of the company.
The counterpart of capital expenditure is operational expenditure ("OpEx").
