Capital expenditure (capex)
Definition
Spending that provides an economic benefit over more than one period, capitalised as an asset on the balance sheet and expensed through depreciation or amortisation over its useful life. Distinguishing capex from operating expense is the fulcrum of WorldCom-style fraud.
Related terms
- Contingent liability
- An obligation whose existence or amount depends on a future uncertain event. Under IAS 37, a provision must be made when an...
- Cookie-jar reserve
- A liability or provision created in excess of its justified amount during a period of strong earnings, then released into income in...
- Off-balance-sheet financing
- Arrangements that provide funding or transfer risk without the resulting obligation appearing on the face of the balance sheet. Operating leases before...
- Operating expense (opex)
- Costs consumed in the current period, expensed in full through the income statement. Reclassifying opex as capex defers the income-statement impact across...
- Special-purpose entity (SPE)
- A legal vehicle created by a sponsoring company for a specific purpose, such as securitising assets or financing a project. Under certain...
Explained in
- Expense and Liability ManipulationSpending that provides an economic benefit over more than one period, capitalised as an asset on the balance sheet and expensed through depreciation or amortis...