What Is a Capital Expense?

Capital expenditure (Capital Expenditure) is also called "income expenditure". It refers to the expenditures incurred by an enterprise to obtain long-term assets. Or expenditures incurred to obtain property or services that provide benefits for more than one accounting period. When such expenditures occur, they should be capitalized, first recorded in the appropriate asset account, and then converted into expenses according to the degree of benefit in each period. Capital expenditures usually include fixed asset additions and renovation expenditures. The purpose of these expenditures is not to maintain their original service capabilities, but to obtain greater future benefits. They can increase future benefits in three ways: (1) Extend the life of fixed assets. (2) Increase the number of services provided each year for the remaining years of fixed assets. (3) Improve the quality of services provided each year for the remaining years of fixed assets. Because the above expenditures can provide fixed assets with greater future benefits, they should be included in the investment as well as the original cost of the fixed assets, and then allocated based on the benefits of each year. The purpose of correctly distinguishing current expenditure and capital expenditure in accounting practice is to correctly calculate the profit and loss of each period and correctly reflect the value of long-term assets. ^[1]

Capital expenditures

Capital expenditure (Capital Expenditure) is also called "income expenditure". It refers to the expenditures incurred by an enterprise to obtain long-term assets. Or expenditures incurred to obtain property or services that provide benefits for more than one accounting period. When such expenditures occur, they should be capitalized, first recorded in the appropriate asset account, and then converted into expenses according to the degree of benefit in each period. Capital expenditures usually include fixed asset additions and renovation expenditures. The purpose of these expenditures is not to maintain their original service capabilities, but to obtain greater future benefits. They can increase future benefits in three ways: (1) Extend the life of fixed assets. (2) Increase the number of services provided each year for the remaining years of fixed assets. (3) Improve the quality of services provided each year for the remaining years of fixed assets. Because the above expenditures can provide fixed assets with greater future benefits, they should be included in the investment as well as the original cost of the fixed assets, and then allocated based on the benefits of each year. The purpose of correctly distinguishing current expenditure and capital expenditure in accounting practice is to correctly calculate the profit and loss of each period and correctly reflect the value of long-term assets. ^[1]

Capital expenditure

capital expenditure; capital charges; capital disposition; capital expenditure;

1.Capital expenditure refers to the purchase of various

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Capital expenditure = purchase and construction fixed

Xie Yumin, Zhang Ge, Lou Cheng, Jiang Shuo, Hu Guoliu, Wang Jianzhi