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Capital Expenditure

Capital expenditures are shown in the Balance sheet as it generates benefits and revenue for more than one accounting period. It may arise due to acquisition of tangible or intangible assets in the organisation. Any expenditure incurred to bring the assets in present working condition at the required location is capitalised. Expenses like installation charges or repair charges for second hand machinery are added to the cost of the asset. Any expenses which increases the earning capacity or productivity of the asset is capital expenditure.


Example: Furniture, vehicles, patent, etc.

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