A capital item is an asset that has a useful life of more than one year, and can be used in the production of goods or services. The term “capital” refers to assets that are used to generate income and increase profitability. Capital items typically include large purchases such as buildings, land, equipment, vehicles and machinery. They also include investments in stocks and bonds, as well as intangible assets like intellectual property rights.

Capital items are usually purchased by companies with the intention of providing them with long-term value over their lifespan rather than short-term gains from quick sales or returns on investment. These types of assets often require higher up-front costs compared to other business expenses, but they can provide substantial savings in terms of increased efficiency and productivity over time if properly managed. Additionally, capital items generally have depreciable lives; meaning that their value slowly decreases over time due to wear and tear or obsolescence Typically through regular depreciation accounting techniques companies are able to account for this gradual decrease in value on their balance sheets each year.