Capital expenditures result in the acquisition of capital assets.
A capital asset is defined as any physical resource that benefits a program for more than one year. Capital assets, also known as fixed assets, include such items as land, land improvements, buildings, fixtures, library books, and equipment, as well as property under construction, and should be recorded at cost. At the acquisition date of the property, cost is measured by the amount of consideration given or received. In addition to the capitalization of the cost to purchase or construct the property, ancillary costs should be capitalized. Ancillary costs include such charges as freight costs and related professional expenditures.