If a firm purchases a piece of equipment,the expense is ________.Therefore,the purchase price can ________ over time,generating a CCA tax shield.

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A capital expenditure refers to the cost of acquiring a long-term asset such as equipment. Such costs are typically depreciated over the useful life of the asset, meaning that the expense can be spread over time. This generates a CCA (capital cost allowance) tax shield, as the depreciation expense can be deducted from taxable income, reducing the firm's overall tax liability. On the other hand, operating expenditures refer to routine expenses such as salaries, rent, utilities, etc., which are fully expensed in the period they are incurred.

If a Firm Purchases a Piece of Equipment,the Expense Is