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Simple English definitions for legal terms
capital asset
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A quick definition of capital asset:
Capital asset: A capital asset is something a business owns that they plan to use to make money for more than a year. These things are usually physical objects like land, buildings, and machines. On a balance sheet, they are called property, plant, and equipment. The business can take a little bit of money off the value of the asset each year, which is called depreciation.
A more thorough explanation:
Capital Asset
Capital assets are things a business owns that are used to make money and are expected to last for more than a year. They are usually physical things that can't be easily turned into cash. On a balance sheet, capital assets are shown as property, plant, and equipment (PP&E). Examples of capital assets include:
- Land
- Buildings
- Machinery
Businesses can spread out the cost of capital assets over their expected useful life. This is called depreciation.
Capital assets are things that a business owns that are used to make money. They are different from things like inventory or cash, which are used up or spent quickly. Capital assets are expected to last for more than a year, so they are usually physical things that can't be easily turned into cash. Examples of capital assets include land, buildings, and machinery. These things are used by a business to make money, and they are expected to last for a long time. Businesses can spread out the cost of capital assets over their expected useful life, which is called depreciation. This helps businesses to account for the cost of these assets over time.