Examples of capital expenditures

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:

  • Buildings (including subsequent costs that extend the useful life of a building)
  • Capital leases
  • Computer equipment
  • Office equipment
  • 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 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)
  • Software
  • Vehicles

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.