Capital expenditure buys or upgrades assets that will benefit the business for more than a year — equipment, vehicles, buildings, major refurbishments that extend an asset's life or capacity. Because the benefit lasts, the cost is capitalized onto the balance sheet and recognized through depreciation over the asset's useful life.
CapEx vs OpEx
| Item | CapEx | OpEx |
|---|---|---|
| What it buys | Long-term assets and major improvements | Day-to-day running costs |
| Accounting | Capitalized, then depreciated | Expensed when incurred |
| Examples | New forklift; rebuilding an engine to extend its life | Fuel; routine servicing; software subscriptions |
Example
Replacing a machine’s motor with an upgraded one that extends its life by 3 years → typically CapEx.
Replacing its drive belt as routine maintenance → OpEx.
In Asetavo
Capitalized assets carry cost, useful life and salvage value for depreciation; maintenance costs are recorded on work orders against the same asset, so you can see both.