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A capital asset is property that is expected to generate future revenue for a business. The distinction between capital assets and operational expenses depends largely on your business. Capital assets are the productive base of your business and this differs greatly from one industry to the next. For example, a utility company may categorize a fleet of cars as a capital asset but a car dealer might categorize cars as inventory. The following are a few common examples of capital asset.
Aircraft | Buildings | Cash | Cash equivalents | Collectibles & art | Commercial kitchen equipment | Computer hardware | Construction equipment | Data centers | Data storage devices | Display cases and shelving | Equipment | Factories | Farm machinery such as tractors | Farm structures such as silos | Furniture | Infrastructure | Laboratory equipment | Land | Land improvements | Machinery | Marketable securities | Media equipment and devices | Mobile devices | Office equipment | Power systems | Railroads and tracks | Restaurant seating and tables | Retail locations | Retail signage and displays | Security systems | Ships and boats | Software licenses | Storage facilities | Tools | Vehicles | |
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Type | | Definition (1) | A long lasting item of property that can be reasonably expected to contribute to the future profits of a business. | Definition (2) | Long-term assets that are used in the operations of a business or held for investment purposes. | Significance | Capital assets are treated differently from operational expenses for tax purposes. In general, the costs of acquiring capital assets can't by fully deducted at the time of purchase and must be amortized or depreciated over the life of the asset. | Related Concepts | |
Next read: Examples of Capital
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