Question

In: Accounting

Is capital budget expenditures and capital projects considered the same or are they different? if different,...

Is capital budget expenditures and capital projects considered the same or are they different? if different, explain the difference.

Solutions

Expert Solution

The capital project budget and capital expenditure on projects usually exceed one year. However differs on following grounds:

A capital project refers to a long-term, capital-intensive investment project with a main goal to build upon, improve to, or add capital asset; thus the cost of product is depreciated or capitalized. A capital budget expenditures refers to a former plan to determine the timings and amount of fixed assets purchases by an organization.

A capital projects involves large scale and large cost in comparison to other investments that involve less resources and planning. A capital budget expenditures determine the fixed assets amount to be adjusted to match the expansion capabilities of the company

The capital projects must be properly managed because they need significant commitment of company time and resources. A capital budget expenditures also needs to be managed effectively because acquisitions of larger fixed asset involve lengthy construction periods whuch usually exceed one year


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