Capital costs - expenses of the enterprise,which are incurred in the acquisition, creation, improvement, expansion of the assets of the enterprise. The main point is that from this type of expenses, the benefit will come from more than one accounting period, but several. Capital costs are spent on the purchase of fixed assets, obtaining them for long-term lease, improvement of the fixed assets available to the enterprise. At the end of all accounting periods, these costs are shown in the Balance Sheet, in the line corresponding to the name of this main asset. Throughout the whole activity of the enterprise, most of the capital expenditures gradually become expenses in the part of the process of forming the financial result. When determining the company's net profit for the year, the corresponding accounting officer calculates what part of the value of a particular fixed asset can be spent in the current year. Since such a distribution of fixed assets is more relevant to design measurements, the financial result accounts should be considered as acceptable approximate values of annual profit.
Capital expenditures have one subjectivemoment: accrual of a certain percentage on the fixed capital invested in stocks. It varies from one enterprise to another depending on the base rate (bank interest rate). The meaning of using such a rate or related rates is that the money needed to replace such capital can be purchased at such a rate.
Capital expenditure is the cost of a technicalreequipment, reconstruction of existing ones and acquisition of new (previously unused) fixed assets. Thanks to them, a simple and wide reproduction of the assets of the enterprise is carried out. Capital expenditure requires clear and constant monitoring. To determine their size in the enterprise, add up the budget of these costs. During this calculation, all planned capital investments are counted. This budget includes such data:
- The initial value of the available fixed assets, calculated for a specific date (the beginning of the period);
- the amount of depreciation deductions, which is supposed to be charged in the planning period;
- the amount of unused amortization at the beginning of the planned period;
- an approximate calculation of the cost of all equipment to be sold or replaced in the planning period;
- the approximate amount of amortization, intended for the acquisition of fixed assets in the planning period;
- the residual value of funds, as well as the amount of amortization of the enterprise on the final date of the planned period.
Capital costs are calculated on the basis ofcalendar plans for the implementation of investment projects, a financing strategy, a budget application for the purchase of fixed assets, a preliminary schedule of investment expenditure flows.
This type of capital investment is inherentlyis a one-time cost aimed at increasing the volume of fixed assets intended for expansion of production. They are a combination of various economic resources intended for the reproduction of fixed assets. Capital costs of the enterprise are divided into direct and indirect. These direct costs direct directly to a specific object of investment in the production sector, indirect (conjugate) - on the associated with the main objects (production or social infrastructure).
As a rule, the source of capital expenditures is a part of the enterprise's profit, depreciation or credit resources.
