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.