<P> For tax purposes, capex is a cost that cannot be deducted in the year in which it is paid or incurred and must be capitalized . The general rule is that if the acquired property's useful life is longer than the taxable year, then the cost must be capitalized . The capital expenditure costs are then amortized or depreciated over the life of the asset in question . Further to the above, capex creates or adds basis to the asset or property, which once adjusted, will determine tax liability in the event of sale or transfer . In the US, Internal Revenue Code § § 263 and 263A deal extensively with capitalization requirements and exceptions . </P> <P> Included in capital expenditures are amounts spent on: </P> <Ol> <Li> acquiring fixed, and in some cases, intangible assets </Li> <Li> repairing an existing asset so as to improve its useful life </Li> <Li> upgrading an existing asset if it results in a superior fixture </Li> <Li> preparing an asset to be used in business </Li> <Li> restoring property or adapting it to a new or different use </Li> <Li> starting or acquiring a new business </Li> </Ol> <Li> acquiring fixed, and in some cases, intangible assets </Li>

Where does capex show up in income statement