Capital expenditure

Capital expenditures means the expenditure the benefit of which is not exhausted within the current year but is enjoyed over a long time period. Such expenditure is of non-recurring nature and results in acquisition of permanent assets.

Usage

CAPEX are used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment (PP&E). In the case when a capital expenditure constitutes a major financial decision for a company, the expenditure must be formalized at an annual shareholders meeting or a special meeting of the Board of Directors. In accounting, a capital expenditure is added to an asset account, thus increasing the asset's basis (the cost or value of an asset adjusted for tax purposes). CAPEX is commonly found on the cash flow statement under "Investment in Plant, Property, and Equipment" or something similar in the Investing subsection.

Accounting rules

For tax purposes, CAPEX is a cost which cannot be deducted in the year in which it is paid or incurred and must be capitalized. The general rule is that if the acquired property's useful life is longer than the taxable year, then the cost must be capitalized. The capital expenditure costs are then amortized or depreciated over the life of the asset in question. Further to the above, CAPEX creates or adds basis to the asset or property, which once adjusted, will determine tax liability in the event of sale or transfer. In the US, Internal Revenue Code §§263 and 263A deal extensively with capitalization requirements and exceptions.

CAPEX

CAPEX, also known as the Kerala State Cashew Workers Apex Industrial Co-operative Society, is an organization managed by the government of Kerala to promote the cashew industry and especially the export market for cashews.

History

The organization was founded in 1984.

Organization

Part of the organization's mission is to provide the maximum number of workdays to cashew workers as a government employment assistance program.

In 1996–1997 the organization managed ten factories and employed 6000 staff.

References

External links