A capital expenditure refers to the expenditure of funds for an asset that is expected to provide utility to a business for more than one reporting period. Examples of capital expenditures are as follows:
Furniture and fixtures (including the cost of furniture that is aggregated and treated as a single unit, such as a group of desks)
Intangible assets (such as a purchased taxi license or a patent)
Land (including the cost of upgrading the land, such as the cost of an irrigation system or a parking lot)
Machinery (including the costs required to bring the equipment to its intended location and for its intended use)
An expenditure is otherwise recorded as an expense if either of the following two rules apply:
The expenditure is for an amount less than the designated capitalization limit of a business. The capitalization limit is established to keep a company from wasting time tracking assets that have little value, such as computer keyboards.
The expenditure relates to an item that is expected to be fully consumed within the current reporting period.