Capital Expenditure Meaning with Examples

Capital Expenditure Meaning: Capital Expenditures are those expenditures that are incurred to acquire fixed assets or to increase or to add value to an existing fixed asset. Fixed assets include both tangible as well as intangible assets. These assets are not meant for the purpose of resale and are used in the business to generate revenues. Capital expenditure is not incurred on regular basis and the amount of this expenditure is relatively higher than the revenue expenditure.

The capital expenditure results in an income or benefits for a longer period that extends for a period of more than a year. This expenditure is shown in the Balance Sheet on the Assets side. Some of the examples of such expenditures are the purchase of plants, furniture, vehicles, goodwill, wages paid for the extension of land, wages paid for constructing additional rooms in a building, etc.


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