Title: Capital Expenditure (CAPEX)
Headings: Capital Expenditure (CAPEX)
Capital Expenditure (CAPEX)
Meaning and definition of capital expenditure
Calculating Capital Expenditure

Content: Capital Expenditure (CAPEX)
Capital Expenditure (CAPEX)
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Meaning and definition of capital expenditure
The general definition of capital expenditure can be given as the funds utilized by a company for acquiring or upgrading the physical assets like property, equipment, or industrial buildings. This outlay type is created by the companies to maintain or raise the scope of their operations. These expenditures count everything from roof repairing to building a brand new factory. The capital expenditure (CAPEX) includes expenses like building renovations or equipment up gradation of equipment which adds value to the assets of a company. Moreover, the capital expenditures generally depreciate with time and feature a long life. As explained by Investopedia, the amount of capital expenditures incurred by a company depends upon the industry occupied by it. Some of the most capital intensive industries are telecom, utilities, and oil. In accounting terms, expenditure is considered as a capital expenditure if the asset is a recently purchased capital asset or an investment that is helpful in improving the useful life of an existing capital asset. Moreover, if expenditure is a capital expense, it should be essentially capitalized, which requires the company to increase the cost of expenditure over the assets’ useful life. However, if the expense is one which assists in maintaining the asset at its present condition, the cost is subtracted fully in the year of expense.