Depreciation and Capital Expenditures
Expenses vs. Long-Term Assets
Businesses often purchase equipment, buildings, and other long-term assets. Instead of deducting the full cost immediately, tax law may require the cost to be recovered over time through depreciation or similar cost recovery methods.
Note
Capital expenditures generally receive different tax treatment from ordinary operating expenses.
Summary
Understanding the difference between current expenses and capital assets is essential in corporate taxation.