Capital Expenditure

These are expenditure of which its benefits is not fully consumed in a given period but it is spread over several periods. It includes all those assets acquired purposely to earn income or to increase the earning capacity of the business.

For instance, land and building such as purchase or land to build shops and building of business shops, purchase of plant and machinery, purchase of motor vehicles to convey goods (products) of business; the actual installation cost in addition to the invoice price should also be capitalized.

Capital expenditure on this note is, treated in the balance sheet of a business, most of the time as assets. Therefore, any expenditure that is made on fixed assets are under capital expenditure.

Leave a Comment

not allowed!