mcboon

What  are Capital expenses?

Please explain what are Capital expenses?

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themask

Capital Expenses are those expenses for which benefit is enjoyed for more than one accounting period. For example, the business has bought a car. Now, car will be used for many years. So, it is a capital expense. Capital Expenditure generally adds Fixed Asset Units or increases economic life, capacity or efficiency of existing fixed assets. The term used for Capital expenditures is ‘Capitalized’. Capital Expenditures are incurred in two ways: • When an asset is acquired, and • When an improvement is made in an existing asset. All the expenditure incurred up to the point of bringing the asset to its intended use is capitalized as the initial cost of asset. An expenditure that improves the performance of an asset from its originally assessed performance is termed as capital expenditure. Source:http://in.docsity.com/en-docs/Fixed_Assets_Part_2-Financial_Accounting-Lecture_Handout_

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butterflymadam

The extent to which an asset is utilized is definitely capitalized because the intial monetary value where this aaset was purchsed.

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