The difference between capital expenses and regular expenses. Also what does capitalizing expenses mean?

Question

I do not understand what capital expenses are compared to just typical business expenses. Also what it means it capitalize an expense? I thought maybe amortize it, but I really am not sure? Thank you!

In: Other

Answer 1

Capital Expenses are expenses to maintain assets -so, if you own a parking lot you have to resurface it periodically. The lot is your capital (because you spent capital to buy it) and the resurfacing is an expense to maintain that capital. It is usually deductible.

When you capitalize an expense you are delaying placing the full value on the books (usually done because the item is depreciating over time.)