From the course: A Guide to Understanding Financial Statements
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Long term assets
From the course: A Guide to Understanding Financial Statements
Long term assets
- [Instructor] Now that we've learned about current assets, let's talk about another asset type, fixed assets, and what's known as Capex, which is short for capital expenditures. Fixed assets are assets used in the operations of your business that have a useful life, typically of more than a one-year period. The actual cash outlay for these fixed assets is called capital expenditures, which again, is oftentimes abbreviated as Capex. Examples can include machinery, or vehicles, laptops, or buildings. The general idea is, if you make a purchase for something where the benefit will be consumed over multiple periods into the future, you can't expense that directly onto your income statement. Instead, it would either be a prepaid expense or a fixed asset. A fixed asset is a tangible asset that will remain on your balance sheet and get consumed over multiple periods. Generally, with fixed assets, you only would record them when they pass a certain materiality threshold, which oftentimes can…
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