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14 Examples of Capital Expenditures

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Capital expenditures, or capex, is spending on fixed assets which are purchased for long-term use. This can be viewed as an investment in a business that isn't immediately expensed but is depreciated or amortized over the useful life of the asset. Capital expenditures can be contrasted with operational expenditures, or opex, that are immediately expensed. The following are illustrative examples of capital expenditures.


Land is a special type of capital expenditure as its value doesn't typically deprecate because it generally doesn't go down in value. In cases such as mining, land is depleted of natural resources. This is accounted for with an expense known as depletion.

Land Improvements

Land improvements is work to improve the value of land such as a road or a garden. Unlike land, land improvements may have a useful life such that they can be capitalized and deprecated. Other land improvements are viewed as preparing the land for use such that they are capitalized as land and not deprecated.


All costs associated with acquiring or constructing buildings.

Legal Costs

Some legal fees can be capitalized if they are related to acquiring, registering or constructing a fixed asset.


Computing hardware such as a computer, data storage or network device.


The cost for equipment used by your business such as a combine harvester for a farm.


Machinery such as an industrial robot.


Vehicles such as an electric truck or an aircraft.


In many cases, the costs required to operationalize a fixed asset can be capitalized. For example, the cost of installing an solar panel system.


Software that you purchase or develop for internal use.

Capital Improvements

Work to improve a fixed asset such as an office renovation or equipment refit.


Some maintenance is viewed as a regular operational expense but major maintenance may be viewed as a capital improvement. For example, painting the walls of a movie theater may be viewed as opex but renovating the theatres may be viewed as capex.

Mergers & Acquisitions

The rules for capitalizing the expense of a merger or acquisition are complex. Some costs are immediately expensed and others can be capitalized.

Intangible Assets

Spending to organically develop your own intangible assets often aren't capitalized. For example, you can't capitalize advertising to build brand value or research & development costs (see note below). Some internal costs for intangible assets such as legal fees for registering a patent can be capitalized. If you purchase an intangible asset such as a patent from someone else this may be capitalized as goodwill and amortized.


Historically, it was common for research & development to be capitalized but this is no longer the case. This is a criticism of current accounting and tax rules as research & development clearly produces future value.
There is a lot of accounting overhead involved in capitalizing assets. For this reason, firms establish a capitalization limit whereby purchases of fixed assets below a certain threshold cost are expensed. For example, a firm with a $2000 capitalization limit would simply expense the purchase of a $1900 computer.
Overview: Capital Expenditures
Spending on fixed assets which are purchased for long-term use.
Related Concepts

Business Costs

This is the complete list of articles we have written about business costs.
Applied Cost
Business Equipment
Capacity Cost
Capital Improvement
Carrying Costs
Closing Costs
Cost Of Capital
Cost Of Revenue
Cost Of Living
Direct Cost
Distress Cost
Fixed Costs
Friction Cost
Employee Costs
Holding Costs
Intangible Cost
Marginal Cost
Operating Cost
Operating Expenses
Legacy Costs
Outlay Cost
Lifetime Cost
Overhead Costs
Menu Costs
Relevant Cost
Normal Costs
Sunk Costs
Tangible Cost
Operational Costs
Travel Expenses
Unit Cost
Opportunity Cost
Variable Costs
Prospective Cost
Semi Variable Cost
Step Costs
Switching Costs
Transaction Costs
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