Long-Term Assets

Long-term assets
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Fixed assets have costs or expenditures that are either categorized as capital or revenue based. Capital expenditure involves the cost incurred to purchase a fixed asset and the resultant costs that contribute to the assets capacity for more earnings. Capital expenditure primarily includes a one off purchasing cost and other associated costs that contribute to increasing the earning capacity of the fixed asset. In accounting, capital expenditure is amortized and added to the value of the fixed assets on the balance sheet and is not charged to the trading and profit or loss account (Jefferson P. Jones, 2012). Some examples of capital expenditure may include a purchased business premises, furniture, vehicles and equipment among others. These are significant acquisitions and purchases, which contribute to the long-term capacity for generating income.
Revenue expenditure includes costs on the fixed asset that are aimed at maintenance of the asset as opposed to increa...