CAPEX — Capital Expenditure

Definition

Spending that creates a long-lived asset benefiting more than one accounting period. CAPEX is not expensed immediately: it is recorded as an asset and expensed gradually via depreciation (tangible) or amortization (intangible).

Formula

Period expense = CAPEX amount ÷ useful life (straight-line)

Worked Example

Buy 5 laptops at $2,500 each in March:

Total CAPEX = 5 x $2,500 = $12,500
Useful life = 3 years (36 months)

Monthly depreciation = $12,500 / 36 = $347.22

March P&L impact: only $347.22 — not $12,500.

Interpretation & Pitfalls

Misclassifying CAPEX as OPEX understates current profit; the reverse overstates it. The classification changes WHEN cost hits the P&L, never the total amount.

In TupicFinance

CAPEX-classified cost items create fixed-asset records whose depreciation schedule posts monthly cost items automatically.