Capital Expenditures

Capital expenditure Capital investment has a major impact on the company's performance, so the criteria for selecting projects should be carefully evaluated. Among the two companies that decided to acquire, Company B is clearly a superior investment backed by net present value (NPV), internal rate of return (IRR), collection period, profitability, as shown in Table 1 . Discount of the index (PI), withdrawal period discount, internal rate of return (MIRR), and 5 year forecast of revenue and cash flow.

Table 1.6 shows state annual capital investment from 1997 to 2012. The peak period of capital investment in 2008 was 9 billion euros, falling below 4 billion euros in 2012, capital investment declined 56%. In the 2013 budget, capital expenditure was further reduced by 550 million euros, and an additional budget of 100 million euros was planned through capital investment. Since 2008, the public finance has received much pressure due to the decrease in tax revenues. We will increase payment of social remittance and debt repayment fee. Table 1.7 shows the deterioration of the total balance of the underlying government (ie, excluding the temporary capital recapitalization expenses), which turned out a small surplus in 2007 to a significant deficit of -11.5% in 2009 Respectively.

Capital expenditure will be spent on business operations to generate revenue of more than one year. Capital investment is the amount spent on purchased assets. For example, office equipment and automobiles are examples of capital investment. Capital investment can also be regarded as the useful life of the asset. Therefore, expenditure incurred is assigned to the period used to match the income earned. On the other hand, operating income occurred throughout the year. Income cost is the cost of wages, facilities and utilities. Therefore, in order to measure profit or loss, it is necessary to amortize the revenue expense to the income statement during the year. This is an accounting concept called "Match" and "Account" concept. Revenue expenditure is also money spent on the dairy products business used to acquire the use of assets and maintain business.

Capital investment means improving spending or profitability of fixed assets. At the same time, income and expenditure is to maintain its profitability. The difference is that while capital investment increases profitability and generates long-term future revenue, revenue expenditure maintains profitability and produces direct profits in a short period of time. (ACCA F3 2009) The main difference between the expenditure of the two forms is that the impact on the financial statements is the balance sheet and income statement. Revenue expenditure is affected in the income statement because it is fully consumed during the period or is carried over to the next period during the remainder of the period.