How should you record capital expenditure?

Capital expenditure (CapEx) should be recorded as an asset on the balance sheet rather than an expense on the income statement. This involves debiting the appropriate asset account and crediting cash or Accounts Payable, depending on how the expenditure is financed. Over time, the asset is then depreciated or amortized, reflecting its usage and allocating the cost over its useful life. Proper documentation and categorization are essential for accurate financial reporting and compliance.