The distinction between a capital expenditure and an expense can be difficult to determine.

Question

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Capital expenditures are for long-term assets that will be used for more than a year or will increase the value of an existing asset, while expenses are for day-to-day operating costs. Determining whether a cost should be classified as a capital expenditure or an expense can be subjective and may require professional judgment. Therefore, the distinction between the two can be difficult to determine.

The Distinction Between a Capital Expenditure and an Expense Can