Capital assets are long-term resources owned by a business or individual that are used to generate income or support operations. These assets typically include items like real estate, machinery, and vehicles. They are not intended for immediate sale but are essential for the ongoing activities of the entity. In accounting, capital assets are recorded on the balance sheet and are subject to depreciation over time, reflecting their decreasing value as they are used. This process helps businesses allocate costs and assess the value of their investments in property and equipment over their useful life.