CAPITAL ASSET Meaning and
Definition
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A capital asset refers to a valuable and long-term asset owned by an individual or a business that holds the potential to generate substantial future economic benefits. This term is commonly used in the field of accounting, finance, and investment. Capital assets can include various types of possessions or investments such as real estate properties, stocks, bonds, machinery, patents, trademarks, and even valuable collectibles.
The primary characteristic of a capital asset is that it is not intended for immediate sale as part of regular business operations, but, instead, is held for a long period of time, typically more than one year. Capital assets contribute to the overall growth and value of an individual or a company and are considered an integral part of their financial structure. They often play a significant role in determining an entity's net worth and financial position.
In relation to taxation, governments may differentiate the treatment of capital assets from other types of assets. Generally, when a capital asset is sold at a higher price than its original purchase price, a capital gain is realized. Taxes may be imposed on this gain, known as capital gains tax, and the rate of taxation can vary depending on the jurisdiction and holding period.
Overall, capital assets represent enduring holdings that are expected to appreciate in value or generate returns over a prolonged period, making them crucial components of financial portfolios and business operations.
Common Misspellings for CAPITAL ASSET
- xapital asset
- vapital asset
- fapital asset
- dapital asset
- czpital asset
- cspital asset
- cwpital asset
- cqpital asset
- caoital asset
- calital asset
- ca-ital asset
- ca0ital asset
- caputal asset
- capjtal asset
- capktal asset
- capotal asset
- cap9tal asset
- cap8tal asset
- capiral asset
- capifal asset
Etymology of CAPITAL ASSET
The word "capital" comes from the Latin word "capitālis", which means "of the head" or "principal". In finance, the term is used to refer to money or property used in the production of goods or income, which is considered essential for the functioning of a business or investment.
The word "asset" is derived from the Old French word "assez", meaning "enough" or "sufficient". It entered English in the late 16th century and originally referred to a property or possession that has value and can be used to produce income or benefit.
When the terms "capital" and "asset" are combined, "capital asset" refers to a financial or tangible asset, such as a building, equipment, or stocks, that is held by an individual or business to generate income or for investment purposes.
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