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Financial Management - Capital Budgeting – A Conceptual Framework

Capital Expenditure - Capital Budgeting – A Conceptual Framework

   Posted On :  19.06.2018 10:49 pm

A capital expenditure is an expenditure incurred for acquiring or improving the fixed assets, the benefits of which are expected to be received over a number of years in future.

Capital Expenditure
 
A capital expenditure is an expenditure incurred for acquiring or improving the fixed assets, the benefits of which are expected to be received over a number of years in future. The following are some of the examples of capital expenditure.

1. Cost of acquisition of permanent assets such as land & buildings, plant & machinery, goodwill etc.

2. Cost of addition, expansion, improvement or alteration in the fixed assets.

3. Cost of replacement of permanent assets.

4. Research and development project cost etc.

5. Capital expenditure involves non-flexible long term commitment of funds.
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