What is Capital Expenditure In Accounting - Capital Expenditure Formula - Definition - Meaning - Examples
What Are Capital Expenditures In Accounting?
Capital Expenditures (Capex) are those expenditures which are incurred by the business but the benefits are still not received by the business during the Current Account Period. These
expenditures are Long-term in nature and provide benefits for more than one year. These are specified only for Tangible Non Current Assets / Fixed Assets and not for Intangible Assets because Intangible Non Current Assets are acquired and developed and need for Impairment and hence free from capitalization while cost incurred on the purchase and installment of Fixed Assets. Examples are amounts utilized on the purchase of Fixed Assets / Tangible Non Current Assets, like plant & Machinery, Furniture, Office Equipment, transportation cost incurred to bring the asset in the Lawn, etc.
Below is the Capital Expenditure Formula to calculate it for Machinery purchased by the business:
Rs.
Capitalized Expenditures For Machinery 20000
Add: New Machinery Purchased During the year 30000
Less: Old Machinery Sold During the year 15000
Add: Depreciation On Machinery for The year 5000
___________
Final Value of Capital Expenditures 40000
___________
So, it is very easy to calculate Capital Expenditures for Fixed Assets by applying above formula if you know the given information and these can be obtained from Financial Statement
and Reports of the company.
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