Capital Assets Definition
Capital assets are anything that can be used in a business or held for investment purposes. This includes land, buildings, equipment, vehicles, furniture, and fixtures. Capital assets can also include intangible assets such as copyrights, patents, and trademarks. These assets are important because they help a company generate revenue and profits.
A capital asset is an item of value to a business or individual. The term ‘capital’ refers to financial investments, such as stocks, bonds and real estate. ‘Assets’ are items that can be converted into cash or used to pay debts.
Most businesses own capital assets. These might include manufacturing equipment, office furniture and vehicles. Some businesses own natural resources, such as timberland or mineral rights. And many businesses have intangible assets such as patents, copyrights or goodwill.
The value of a capital asset may rise or fall over time. For example, the value of a piece of land may go up if the local economy improves. Or the value of a patent may go down if a new invention renders it obsolete.
