Capital expenditure budget means a formal plan which states the timing & amount of fixed asset purchases by a formal organization. It involves a wide array of expenditure that includes upgrades to the existing assets, equipment needed by new hires and the constructions of new facilities.
How to Write a Capital Expenditure Budget
This identifies the cash that a company will invest in a project & long term assets. Some of the examples of long term assets are such as new products, joint ventures, new markets, etc. Anyway, it is very important to know how to create a sample budget for your company.
It is actually not difficult to make this document as long as you know its format. To write it rightly, there are some rules you should follow. First of all, you can begin from the title. You can simply entitle this document Capital Expenditure Budget. You can put your company’s name following it.
This budget plan is presented in form of a table. However, before you start providing the information about expenditures and budget, you should write down some information that include development name, management name, presented by, phone number, and also email address.
Now, you can start creating the budget template printable. The table must include some columns. From the left one, the first column is Type of Expenditure. On the table, you must mention all types of expenditure. Different companies may have different types of expenditure.
There are many examples related to the types of expenditure. They include carpeting, computer equipment and software, doors, countertops, exterior wall, foundation, landscaping, painting, security system, trash collection area, storage, benches, play area, machinery, etc.
The second column is for Description. Here, you have to describe each type of expenditure you mention on the table. Describe it in short and understandable words. The description may relate to the providers or any other thing else.
Then, you should make some columns for Operating Account and Reserve Escrow in some years. For example, you want to make the capital expenditure budget for 3 years. Here, you should write the cash needed to pay for each type of expenditure.
At the bottom, you must create Total Budget Capital Expenditures. Then, you should sum up the total amount of cash for the operating account and reserve escrow for each year. Make sure that you calculate them rightly.
From this, we all know that capital expenditure budget spans a longer period compared to an annual budget. It can be two, three, or more years. It is because some larger fixed asset acquisitions may involve lengthy construction periods which greatly can exceed a year.
Besides that, the nature of a business can involve ongoing series of major construction project which can extend up to a decade to the future. The example is a chip fabrication company builds more facilities to compete. Each facility requires up to 5 years completing.
That is all the guidelines how to create a template of capital expenditure budget. This is just an example. Your company may have different expenditures and budget plans. Now, practice making it for your own company.
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