Capital Budgeting

Capital Budgeting

Introduction

A capital budget is a template that shows the planned investments in real estate, equipment, improvements and other capital assets during a given period. These expenses are different from normal living expenses as they can be capitalized under accepted accounting practices. Instead of having to record the total expenditure as a deduction from income in an accounting period, capitalized costs are spread over a period of years. Each year, a portion of the capitalized costs are recorded as depreciation.

If you are asked to submit a capital budget request, estimates the total cost associated with each type of investment. For example, you may have a line ...