Capital Expenditure (CAPEX)

Knowledge Center

• About
• Home
• Dictionary
• Encyclopedia
• Question?
• Views

• Register
• Log in
• Help

• Change & Organization
• Communication & Skills
• Decision-making & Valuation
• Ethics & Responsibility
• Finance & Investing
• HRM
• Knowledge & Intangibles
• Leadership
• Marketing
• Program & Project
• Strategy
• Supply Chain & Quality

Description of Capital Expenditure. Explanation.

Definition Capital Expenditure (CAPEX). Description.

Capital Expenditure is a payment (investment) that creates future benefits. It is incurred when a company spends money to acquire or upgrade physical, fixed assets such as equipment, property, industrial buildings with a useful life extending beyond the taxable year. In some cases also in intangible assets.

In accounting, a capital expenditure is added to an asset account (i.e. capitalized), thus increasing the asset's basis (the value or cost of the asset adjusted for tax purposes) in the event of sale or transfer.

For tax purposes, depending on the country, CAPEX is typically a cost which cannot be deducted in the year in which it is paid or incurred. It must be capitalized: the general rule is that if the acquired property's useful life is longer than the taxable year, then the cost must be capitalized.

The capital expenditure costs are then amortized or depreciated over the life of the particular asset.

Included in capital expenditures are amounts spent on:

• Acquisition of fixed, and in some cases, intangible assets
• Repair of an existing asset so as to improve its useful life
• Upgrade of an existing asset if its results in a superior fixture
• Preparation of an asset to be used in business
• Restoring a property or adapting it to a new or different use
• Start or acquisition of a new business

Capital Expenditure Forum   Capital Expenditure Types? I want to know the actual types of capital expendi...         Start a new topic

Capital Expenditure Special Interest Group Special Interest Group

Best Practices - Capital Expenditure Premium

Expert Tips - Capital Expenditure Premium

Resources - Capital Expenditure Premium Capital Budgeting and Risk Management Techniques Presentation about advanced capital budgeting, inc... Usage (application): Capital Budgeting, Risk Management     News about Capital Expenditure         Videos about Capital Expenditure         Presentations about Capital Expenditure         Books about Capital Expenditure         More about Capital Expenditure

Compare: Return on Investment

Return to Management Hub: Decision-making & Valuation  |  Finance & Investing

More on Management  |  Return to Management Dictionary  | 

This ends our Capital Expenditure summary and forum.