Answer to Question #82347 in Accounting for omale monday ojonuba

Question

in two sentence, state the ways in which capital expenditures are treated in accounts and why

Answer 1

In terms of accounting, an expense is considered to be a capital expenditure when the asset is a newly purchased capital asset or an investment that improves the useful life of an existing capital asset. If an expense is a capital expenditure, it needs to be capitalized. This requires the company to spread the cost of the expenditure (the fixed cost) over the useful life of the asset. If, however, the expense is one that maintains the asset at its current condition, the cost is deducted fully in the year the expense is incurred.

Source:

https://www.investopedia.com/terms/c/capitalexpenditure.asp#ixzz5UqVmSzYA