Capital loss are the losses which arise not from the normal course of business. Loss on sale of fixed asset is an example of capital loss. A capital loss is the loss incurred when a capital asset, such as an investment or real estate, decreases in value; this loss is not realized until the asset is sold for a price that is lower than the original purchase price.
The amount of loss undergoes due to the sale of fixed assets, shares and debentures at a value less than their book value or face value are capital loss. It does not happen in the usual course of the business. It happens in the course of selling assets and raising capital. Generally, it is shown on the asset side of the balance sheet and written off out of the capital profit.
Items relating to capital loss
- Loss on sale of fixed assets
- Discount on issue of shares and debentures
- Premium on salvation of debentures
- Loss on sale of investment