Capital Expenditure

Capital expenditures are the costs of acquiring or upgrading physical and intangible assets necessary for a business. Physical capital includes real estate, computers, office furniture, and other physical assets necessary for the business to operate.

Intangible capital includes intellectual property, copyrights, and trademarks. The IRS requires businesses to capitalize capital expenditures, which means the capital expenditures are included on the balance sheet and written off over time as the assets depreciate.