What is a Capital Asset?

Capital assets are significant pieces of property such as homes, cars, investment properties, stocks, bonds, and even collectibles or art. For businesses, a capital asset is an asset with a useful life longer than a year that is not intended for sale in the regular course of the business’s operation. This also makes it a type of production cost. For example, if one company buys a computer to use in its office, the computer is a capital asset. If another company buys the same computer to sell, it is considered inventory.