Describe a capital expenditure of the company. Why is this item a capital expenditure?

Colorado Technical University| FINC410 Corporate Finance | Colorado Technical University

Capital expenditures are purchases made by companies that increase their long-term productivity or value. You can purchase new equipment, build buildings or buy property as examples of capital spending.
Because it can provide long-term benefits for the company than short-term profits from operating expenses, this item is considered capital expenditure. The resulting asset may also be used over multiple accounting periods and can generate income by adding to the company’s productive capacity.

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