Hedge Fund Glossary

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Capital Expenditures

an expenditure by a business that is Capitalized to the Balance Sheet under the rules of GAAP and then Amortized as an Income Statement expense over a period of more than one year rather than being immediately “expensed” to the Income Statement in full in the current period. A Capital Expenditure is distinguished from a current expense because it has a long-term impact that will benefit the business in future years as well as the current year.
Buying vegetables for dinner is probably a current expense. Buying a vegetable farm is probably a Capital Expenditure. See Amortization and Capitalize.

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