Definition

Capital expenditures

Capital expenditures refer to the expenditures that increase the operating efficiency, productive capacity, or useful life of a plant asset. These are also referred to as Additions and improvements.

They are usually material in amount and occur infrequently. Additions and improvements increase the company’s investment in productive facilities. Companies generally debit these amounts to the plant asset affected. Most major U.S. corporations disclose annual capital expenditures.

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