Capital Goods


DEFINITION of 'Capital Goods'

1. Any tangible assets that an organization uses to produce goods or services such as office buildings, equipment and machinery. Consumer goods are the end result of this production process.

2. The sector of the economy that includes capital-goods-producing businesses such as Boeing, Caterpillar and Lockheed Martin. Aerospace, defense, construction and machinery businesses make up most of the capital goods sector.


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BREAKING DOWN 'Capital Goods'

Capital goods represent a major expense for businesses. However, capital goods that a business does not use up in a single year of production cannot be entirely deducted as business expenses in the year they are purchased. Instead, they must be depreciated over their useful lives, meaning that the business takes a partial tax deduction for the item for each year that the capital good is in use.

  1. Capital Expenditure (CAPEX)

    Capital expenditure, or CapEx, are funds used by a company to ...
  2. Consumer Goods Sector

    A category of stocks and companies that relate to items purchased ...
  3. Capital Formation

    A term used to describe net capital accumulation during an accounting ...
  4. Disinvestment

    1. The action of an organization or government selling or liquidating ...
  5. Heavy Industry

    Relates to a type of business that typically carries a high capital ...
  6. Accountant

    A professional who performs accounting functions such as audits ...
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