What are capital assets?

A capital budget shows a group’s or organization’s planned investments in capital assets (the spent budget then known as CAPEX, Capital expense). Organizations generally acquire capital assets to help generate profit or, if they are a nonprofit, to achieve their mission.

Examples of capital assets include:

  • Land
  • Buildings
  • Machinery
  • Equipment
  • Furniture and fixtures

Capital assets are usually not liquid; that is, they can’t quickly be turned into cash. Organizations liquidate them only as a last resort; for instance, if a business is engaged in bankruptcy proceedings.

Depending on the type of business, capital assets may represent the bulk of a company’s owned assets. Equipment-heavy businesses, such as those involved in oil exploration or construction, are good examples of companies with large investments in capital assets.

Advertisements


Categories: Personal Finance

Tags:

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: