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14 Examples of Capital Investment

 , April 20, 2018
Capital investment is spending that has long term value to a business. This is often contrasted with expenses that have value to the business today. The following are common types of capital investment.

Land & Buildings

The purchase of land and buildings for your business.

Construction

Any costs that go into constructing a building or structure is a capital investment.

Landscaping

Productive changes to land such as an irrigation system for a farm.

Improvements

Maintenance is expensed. Significant improvements to capital that significantly extend its lifespan are capital investments.

Furniture & Fixtures

Anything that goes into the interior of a building such as a couch or painting that is part of the decor.

Infrastructure

Infrastructure such as networking equipment for a data center.

Machines

Machines such as an industrial robot.

Computing

Computing equipment and devices.

Vehicles

Vehicles used in your business.

Software Development

Software development can often be capitalized for software that is successfully operationalized. A failed project is expensed. As such, a project needs to be finalized before it can be capitalized.

Software

Software you buy from other firms is typically considered a capital investment. Recurring as-you-go license fees are expensed.

Acquisitions

Acquiring another company that adds value to your business.

Branding

A brand purchased from another company is a capital investment. Developing your own brand is typically viewed as an expense.

Intellectual Property

Intellectual property purchased from another company such as a patent. Your own research and development is typically viewed as an expense with some exceptions.

Notes

(1) This publication is about the concept of a capital investment. Accounting rules for capitalizing spending are beyond the scope of this publication. This requires the advice of a Registered Professional Accountant with knowledge of the tax treatment of spending in your jurisdictions.
(2) Many types of intangible capital are not considered a capital investment according to current accounting practices. For example, investments in your knowledge might be considered human capital but this isn't viewed as a capital investment. Likewise, structural capital, social capital and innovation capital can be impossible to capitalize. This is a common criticism of current accounting practices as investments in physical things are often treated as capital investments where investment in intangible capital are often considered expenses.
Overview: Capital Investment
Type
DefinitionSpending that has long term value to a business.
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Capital

A list of common types of capital.

Capital Goods

A definition of capital goods with examples.

Structural Capital

A definition of structural capital with examples.

Intangible Assets

Assets that have no physical presence.

Intellectual Capital

The 3 main types of intellectual capital.

Natural Capital

The basic types of natural capital.

Social Capital

The definition of social capital with examples.

Cultural Capital

A definition of cultural capital with examples.

Intellectual Property

A list of key intellectual property terms.

Inventive Step vs Non-Obviousness

The difference between inventive step and non-obviousness.

Relational Capital

A definition of relational capital with examples.

Factors Of Production

Examples for each of the four factors of production.
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