During project cost planning, the project manager must classify expenses correctly. The organization chooses to lease new multifunction printers and pay a fixed monthly fee instead of purchasing the devices outright. In the project budget, how should the recurring lease payments be categorized?
Because the company is making ongoing, recurring payments to use equipment it does not own, the lease payments are treated as operational expenses (OpEx). A one-time purchase of the equipment would have been a capital expense (CapEx) because it represents a long-term investment that would be capitalized and depreciated over time.
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What is the difference between operational expenses and capital expenses?
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Why can’t leasing costs be classified as capital expenses?
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How is depreciation different from operational expenses?