Capital expenditure
Capital expenditure is expenditure included in the cost of an asset because it meets the relevant recognition requirements. For tangible non-current assets, this can include purchase price and costs directly attributable to bringing the asset to the location and condition needed for intended operation. Qualifying improvements may be capitalised; ordinary repairs and day-to-day servicing are expensed.
Worked example
A machine costs $20,000, delivery $700 and installation $1,300. These qualifying costs give an initial asset cost of $22,000.
Common mistake
A large payment or a long-lasting benefit does not automatically qualify: training and general administration are normally expensed.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | F2 | Direct | July 2027–August 2028 |
| ACCA | F3 | Supporting | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| FIA | FFA | Direct | September 2026–June 2027 |