Capital Asset – a physical item not a product for sale, instead used in the operations of the business. A capital asset has a market value and a useful life of typically more than one year. Also called a fixed asset, or property, plant and Equipment (PP&E)
A few examples of capital assets:
- vehicles
- heavy equipment
- computers
- furnishings
- buildings
Capital assets are usually not written off the books as a single expense all in one year. Instead the expense related to a capital asset is recorded over time. This drawn out method of writing off capital assets is called depreciation.