sentences:  In terms of its accounting treatment, an expense is recorded immediately and impacts directly the income statement of the company, reducing its net profit.In contrast, a capital expenditure is capitalized, recorded as an asset and depreciated over time.The Internal Revenue Code, Treasury Regulations (including new regulations proposed in 2006), and case law set forth a series of guidelines that help to distinguish expenses from capital expenditures, although in reality distinguishing between these two types of costs can be extremely difficult.