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User: Capital Asset is a "fixed asset employed as a means of generating income, generally the one on which depreciation is claimed.

2018-12-12T19:44:30Z

Capital Asset is a "fixed asset employed as a means of generating income, generally the one on which depreciation is claimed.

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Business Dictionary defines Capital Asset as a "fixed asset employed as a means of generating income, generally the one on which depreciation is claimed."<ref>What is a Capital Asset? [http://www.businessdictionary.com/definition/capital-asset.html Business Directory]</ref>

'''Characteristics of a Capital Asset'''<ref>Characteristics of a Capital Asset [http://www.accountingtools.com/dictionary-capital-asset Accounting Tools]</ref><br />
A capital asset has the following characteristics:
*It has an expected useful life of more than one year
*Its acquisition cost exceeds a company-designated minimum amount, known as the capitalization limit
*It is not expected to be sold as a normal part of business operations, as would be the case for inventory
*It tends not to be easily convertible into cash

'''Capital Asset Example'''<ref>How Capital Assets Work? [http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/capital-asset-123 Investing Answers]</ref><br />
Capital assets usually include buildings, land, and major equipment. For example, Company XYZ might own a factory building on three acres of land, and the factory might be full of expensive equipment. The building, the land, and the equipment are all usually considered capital assets. Construction in progress, trademarks, patents, copyrights, vehicles, intellectual property, and art can also count. Capital assets are recorded on the balance sheet at their historical cost, less any accumulated depreciation (or amortization in the case of intangible assets). So if Company XYZ paid $100,000 for a piece of equipment in the factory, it would record it as a $100,000 asset on its balance sheet. But as the asset ages and becomes worth less, Company XYZ would increase the amount of accumulated depreciation associated with the equipment, so that the equipment's net book value reflects its reduced value.

'''Capital Assets and Capital Expenses?'''<ref>How Do Capital Assets Relate to Capital Expenses? [http://www.investopedia.com/terms/c/capitalasset.asp Investopedia]</ref><br />
When a business purchases capital assets, the Internal Revenue Service (IRS) considers the purchase a capital expense. In most cases, businesses can deduct expenses incurred during a tax year from their revenue collected during the same tax year, and they report the difference as their business income. However, most capital expenses cannot be claimed in the year of purchase, but instead must be capitalized or written off incrementally over a number of years.

===References===
<references />

===Further Reading===
*Managing Capital Assets [http://www.gfoa.org/sites/default/files/GFR_AUG_11_40.pdf gfoa.org]
*Aligning Capital Asset Delivery with Organisational Development [http://www2.deloitte.com/uk/en/pages/infrastructure-and-capital-projects/articles/aligning-capital-asset-delivery-with-organisational-development.html Deloitte]

@@ Line 1: / Line 1: @@
-Business Dictionary defines Capital Asset as a "fixed asset employed as a means of generating income, generally the one on which depreciation is claimed."<ref>What is a Capital Asset? [http://www.businessdictionary.com/definition/capital-asset.html Business Directory]</ref>
+[[Business]] Dictionary defines [[Capital]] [[Asset]] as a "fixed asset employed as a means of generating income, generally the one on which [[depreciation]] is claimed."<ref>What is a Capital Asset? [http://www.businessdictionary.com/definition/capital-asset.html Business Directory]</ref>
@@ Line 5: / Line 5: @@
 A capital asset has the following characteristics:
 *It has an expected useful life of more than one year
-*Its acquisition cost exceeds a company-designated minimum amount, known as the capitalization limit
+*Its [[acquisition]] cost exceeds a company-designated minimum amount, known as the capitalization limit
-*It is not expected to be sold as a normal part of business operations, as would be the case for inventory
+*It is not expected to be sold as a normal part of business operations, as would be the case for [[inventory]]
 *It tends not to be easily convertible into cash
 '''Capital Asset Example'''<ref>How Capital Assets Work? [http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/capital-asset-123 Investing Answers]</ref><br />
-Capital assets usually include buildings, land, and major equipment. For example, Company XYZ might own a factory building on three acres of land, and the factory might be full of expensive equipment. The building, the land, and the equipment are all usually considered capital assets. Construction in progress, trademarks, patents, copyrights, vehicles, intellectual property, and art can also count. Capital assets are recorded on the balance sheet at their historical cost, less any accumulated depreciation (or amortization in the case of intangible assets). So if Company XYZ paid $100,000 for a piece of equipment in the factory, it would record it as a $100,000 asset on its balance sheet. But as the asset ages and becomes worth less, Company XYZ would increase the amount of accumulated depreciation associated with the equipment, so that the equipment's net book value reflects its reduced value.
+Capital assets usually include buildings, land, and major equipment. For example, Company XYZ might own a factory building on three acres of land, and the factory might be full of expensive equipment. The building, the land, and the equipment are all usually considered capital assets. Construction in progress, trademarks, patents, copyrights, vehicles, intellectual property, and art can also count. Capital assets are recorded on the balance sheet at their historical cost, less any accumulated depreciation (or [[amortization]] in the case of intangible assets). So if Company XYZ paid $100,000 for a piece of equipment in the factory, it would record it as a $100,000 asset on its balance sheet. But as the asset ages and becomes worth less, Company XYZ would increase the amount of accumulated depreciation associated with the equipment, so that the equipment's net book [[value]] reflects its reduced value.
 '''Capital Assets and Capital Expenses?'''<ref>How Do Capital Assets Relate to Capital Expenses? [http://www.investopedia.com/terms/c/capitalasset.asp Investopedia]</ref><br />
-When a business purchases capital assets, the Internal Revenue Service (IRS) considers the purchase a capital expense. In most cases, businesses can deduct expenses incurred during a tax year from their revenue collected during the same tax year, and they report the difference as their business income. However, most capital expenses cannot be claimed in the year of purchase, but instead must be capitalized or written off incrementally over a number of years.
+When a business purchases capital assets, the Internal Revenue [[Service]] (IRS) considers the purchase a capital expense. In most cases, businesses can deduct expenses incurred during a tax year from their revenue collected during the same tax year, and they report the difference as their business income. However, most capital expenses cannot be claimed in the year of purchase, but instead must be capitalized or written off incrementally over a number of years.

Capital Assets - Revision history

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User: Capital Asset is a "fixed asset employed as a means of generating income, generally the one on which depreciation is claimed.