Capital Expenditure and Depreciation Essay Example | Topics and Well Written Essays - 1500 words

Capital Expenditure and Depreciation - Essay Example Acquiring fixed assets like building, land, plant and machinery, motor vehicle and furniture fittings are regarded as the capital expenditure. The assets are not to be sold for making profit but that assets should be retained in the business. Capex generally yields gains over a long period of time (Banerjee, 2010). Capex on a financial statement is important as the investors are interested in the amount of capital improvement that he experiences. The declining capex will make the investor cautious as well as abnormal increased values signals that the investor should also be cautious (Jennings, 2006). The different types of capex are the following: Expenditure resulting from the acquisition of permanent assets: Any asset that can be converted into cash later. The money spent to acquire the asset is called capex (Warren, 2009). Expenditure resulting from purchase, erection or receipt of a fixed asset: The expenses in addition to the purchase price that are incurred for manufacturing th e asset for use are added to the cost of the asset and thus is regarded as capex. The examples are the wages that are paid to the workers for manufacturing machines, the cost of the place where the machine will be manufactured and the interest on the loan raised to purchase a fixed asset. Expenditure resulting from improvement of the fixed asset: If the profit earning capacity increases because of the expenditure, through lowering of cost or increase the output level, it is capital expenditure. Expenditure incurred to get the right to carry on business: The expenses that are needed for establishing a business or acquiring license is capital expenditure. The cost of patent is also capital expenditure. Expenditure resulting from acquisition of tangible asset: The expenditure incurred on a non profitable asset is treated as capital expenditure. Factors that add to the cost of capital expenditure (with examples) Cost of capital expenditure i.e., the interest payments and the cash-flow, that affect cash that are available in the capital goods. Example: If one borrows ? 10000 to buy a new coffee maker and it brings with it an additional ?1000 / month of profit but the monthly interest that are to be paid for the loan is ?1120, then it is said to be the bad expenditure with a negative impact on the business. Now if the same person borrows the same amount but bring ?1500 profit/month it is a good investment. Thus, there are different factors that add up to the cost of capital expenditure and can make an investment unprofitable and even profitable. How does capital expenditure lose value over time? A product when capitalized the value of the item is placed in an asset that increases the total value of the company. The reason behind these is that the items are considered to lose their value slowly or increase over time. The asset is listed on the company’s property tax inventory and the asset is provided a number for tracking purposes (Elmaleh, 2005). The company gets bill for taxes on the value of the assets and the listing of an asset that is depreciating decreases in value each year until it is considered to have no value (Hoofman, 2009). After capitalizing, the item is allowed to depreciate over a period of time, such as 3 – 5 years of time. After depreciation the entire cost of the item is not revealed in the expenses at one time,

Voluntourism Research Paper Example | Topics and Well Written Essays - 2250 words

Voluntourism - Research Paper Example Voluntourism comes from a desire to contribute something, however small, to the wellbeing of people who are otherwise disadvantaged. It gives those who get involved in it the opportunity to visit new countries, experience new environments, and most of all, to learn about the cultures of those people among whom they will be living. Voluntourism provides regular people the chance to visit places, which they would otherwise not normally visit, such as the slums in less developed countries. Some types of voluntourism involve people visiting places for the purpose of studying their environment, or being able to conduct other scientific studies. Those who participate in voluntourism projects have to provide a fee whose purpose is to cover the expenses during their travels in different parts of the world. Furthermore, the participants are required to participate in projects within the countries, which they visit, and this is usually based on their location and their personal interests. The people who originally went for voluntourism tended to have a direct connection to the causes in which they were going to volunteer. The organizations that facilitated their travel considered the duration of their travels to be of the short-term, volunteering in projects in the countries, which they were visiting. ... These often gave people the opportunity to contribute to these projects for short periods before going back to their home countries. The origins of what came to be voluntourism can be traced back to the United States Peace Corps, which created a path for volunteers (voluntourists) to travel all over the world (La Prensa San Diego, 2011). Later, the need to travel, while contributing something to the less advantaged communities in the world, became immensely popular among college students; this led to the development of exchange programs, which enabled students, to tour to and study in the countries of their preference. Not only did these students get to know more about these countries and enjoy themselves, some even volunteer in local projects (Wagner, 2009). Voluntourism also came to affect the scientific field because some scientific organization saw it as a way through which they could get the public interested in science. These organizations facilitated the bringing collectively of scientists and unpaid assistants in various locations around the world, which had scientific projects. This served a dual purpose as it provided free labor for scientists in the field, that is, the volunteers while it was also a source of additional funding to the projects, through the fees paid by the volunteers. Voluntourism picked up pace in the 1990s when companies in the travel industry developed means through which individuals could go on vacation, and while on it, also volunteer in various projects. These companies targeted those people who wanted to travel and had no prior experience with causes. The products provided by the travel industry attracted a large number of young people, who tend to be the most adventurous of all age groups (Hansen, 2009).