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.


Categories: Personal Finance


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