Home Investing Dictionary Investment Term Capital Expenditure ( CAPEX )
Capital Expenditure ( CAPEX )
Written by Kenny Foo   
Tuesday, 10 March 2009 16:15

Capital expenditure ( CAPEX ) or capital expense are expenses of a corporation to acquire or upgrade physical assets such a machinery, equipments, industrial building and property.

 Those physical assets are meant for maintaining or upgrading the scope of business operation for a corporation. Capital expenditure  ( CAPEX ) can include every purchase or upgrade of physical assets as long as the assets can last more than a years and will be depreciated or amortized year by year. On the other words, capital expenditure ( CAPEX ) is incurred when a corporations spends money either to buy fixed assets or upgrade existing assets with a useful life more than a year. Some examples of capital expenditures ( CAPEX ) are buying a fixed assets, preparing office equipments for business operation, legal fees for buying a real estate, refurnish office and more. Capital expenditure ( CAPEX ) can be found in cash flow statement under " Investment in property and equipments " or equivalent terms.

There is always an ongoing questions for investors to differentiate capital expense  ( CAPEX ) and operating expense ( OPEX ). Costs that are considered as expenses such as operating expenses ( OPEX ), are recorded as costs for certain financial period in financial statement. Cost that are capitalized such as capital expenditure ( CAPEX ) will be depreciated and amortized over period of years and it will show in balance sheet as fixed assets.

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Last Updated ( Tuesday, 10 March 2009 17:13 )
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