Capital Expenditure

Definition of Capital Expenditure. Capital expenditure is when a firm buys something that cannot be counted as a cost of a business, but reflects an expansion in a firms assets.

Examples of capital expenditure include:

  • The purchase of existing business.
  • Purchase of capital goods from other suppliers, e.g. machines, computers, lighting systems.

For tax purposes, capital expenditure often has a limit. For example, expenditure of more than £1000 may be counted as capital expenditure rather than a cost of production.

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