Capital assets are significant pieces of property owned by an individual or company, typically acquired for long-term use, investment, or production. They are not intended for sale in the ordinary course of business. Here are some common examples of capital assets:
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Real Estate: Land and buildings owned for investment, rental, or business purposes.
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Equipment and Machinery: Tools, machinery, vehicles, and other equipment used in the production of goods or services.
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Investments: Stocks, bonds, and other financial instruments held for long-term appreciation or income generation.
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Intangible Assets: Patents, trademarks, copyrights, and goodwill associated with a business.
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Personal Property: High-value personal items such as art, collectibles, jewelry, and vehicles.
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Business Assets: Inventory and assets used in the operation of a business that are not classified as current assets.
In accounting and taxation, capital assets are typically recorded on the balance sheet and may be subject to different rules for depreciation and taxation compared to current assets. The treatment of capital assets can have significant implications for financial reporting and tax liabilities.