Capex & Opex
Capex & Opex
Capex & Opex
Capex (or Capital Expenditure) is a business expense incurred to create future benefit i.e.
acquisition of assets that will have a useful life beyond the tax year. e.g. expenditure on
assets like building, machinery, equipment or upgrading existing facilities so thier value as an
asset increases.
On the other hand, those expenditures required for the day-to-day functioning of the
business, like wages, utilities, maintenance and repairs fall under the category of
Opex (operational expenditure). Opex is the money the business spends in order to
turn inventory into throughput. Operating expenses also include depreciation of
plants and machinery which are used in the production process.
Comparison chart</> EMBED THIS CHART
Capex
Opex
Definition:
Accounting treatment:
In throughput
accounting:
In real estate:
Examples:
Meat slicer: CAPEX. Gloves worn while using the slicer: OPEX.
Cash register: CAPEX. Register receipt tape: OPEX.
Elevator: CAPEX. Elevator maintenance services: OPEX