Capital Expenditure

This is the use of funds to purchase fixed assets, such as machinery, or buildings / work stores, or to make long-term improvements to assets, such as the reconstruction of a sports pitch. This latter example might cost £500,000, or upwards, and which might be determined to have a lifespan of 8-years, gradually losing its value. For accounting purposes this means that it is depreciating in, or losing, value each year. The actual amount would depend on the method used: either Straight Line Depreciation, or Reducing Balance Depreciation.