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Capital expenditures (CAPEX) are expenditures altering the future of the business. A capital expenditure is incurred when a business spends money either to buy fixed assets or to add to the value of an existing fixed asset with a useful life extending beyond the taxable year. Capital expenditure, or CapEx, is funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. These expenditures can include everything from repairing a roof to building, to purchasing a piece of equipment, or building a brand new factory.
Opex, or operational expenditure 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, or operational expenditure. Operating expenses also include depreciation of plants and machinery which are used in the production process.
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). For example, a business might buy new assets, like buildings, machinery, or equipment, or it might upgrade existing facilities so their value as an asset increases.
Expenditures required for the day-to-day functioning of the business, like wages, utilities, maintenance, and repairs, fall under the category of Opex, or 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.
Any expenditure that is going to give benefit for less than a year is OPEX.Whereas, any expenditure that could benefit you for more than one year is CAPEX.
However, its not a thumb rule. You can classify it as per your discretion considering the nature of the expense and its respective treatment for tax purpose.
