Carter sold 100 shares of mitsui, inc., for $8,000, but he only recognized $2,000 as income because the original purchase price was $6,000. This is because of the Capital recovery concept.
Capital recovery is a break-even measure because it primarily pertains to recouping initial investment capital through investment returns. It can also be used to describe recovering invested money through the sale of assets. The phrase can also be used to describe corporate debt recovery.
Long-term assets as well as businesses, divisions, or business lines are all included in the definition of "capital recovery." For instance, if your business spends $30,000 on a printing press, it won't be able to calculate its earnings until it has recouped that amount.
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