Capital Asset

AAA

DEFINITION of 'Capital Asset'

A type of asset that is not easily sold in the regular course of a business's operations for cash and is generally owned for its role in contributing to the business's ability to generate profit. Furthermore, it is expected that the benefits gained from the asset will extend beyond a time span of one year. On a business's balance sheet, capital assets are represented by the property, plant and equipment figure.

INVESTOPEDIA EXPLAINS 'Capital Asset'

Examples include land, buildings, machinery, etc. Generally, these are assets that cannot quickly be turned into cash and are often only liquidated in a worst-case scenario. For example, a company might look at selling a capital asset if it was looking at restructuring or the business was engaged in bankruptcy proceedings.

Depending on the business involved, capital assets may represent the majority of assets that are owned. For example, in equipment heavy operations such as oil exploration, it is not surprising to find the majority of a business's assets to be capital assets.

RELATED TERMS
  1. Capital

    1) Financial assets or the financial value of assets, such as ...
  2. Non-Core Assets

    Assets that are either not essential or simply no longer used ...
  3. Core Assets

    An essential, important or valuable property of a business without ...
  4. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  5. Intangible Asset

    An asset that is not physical in nature. Corporate intellectual ...
  6. Tangible Asset

    Assets that have a physical form. Tangible assets include both ...
Related Articles
  1. Investing

    How do small firms record installment ...

  2. Investing Basics

    Reading The Balance Sheet

  3. Options & Futures

    Advanced Financial Statement Analysis

  4. Fundamental Analysis

    What are some examples of industries ...

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center