Question

Question 1.
State whether the following expenses are capital or revenue in nature:
(i) Expenses on whitewashing and painting of a building purchased to make it ready for use.
(ii) ₹ 10,000 spent on construction platform for a new machine.
(iii) Repair expenses of ₹ 25,000 incurred for whitewashing of factory building.
(iv) Purchased a new car.

Answer 1

Answer:

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Answer 2

1. It is a Capital expenditure

2. It is a Capital expenditure

3. It is a Revenue expenditure

4. It is a Revenue expenditure

Explanation:

• Capital expenditures are those expenditures which are for the fixed assets like machinery and plant, that are expected to be productive assets for the long time.

• Revenue expenditures are those expenditures which are occurred  for costs in relation to the particular transactions of the operating years.

1. It is a capital expenditure as it is occurred for making the asset ready to use.

2. It is a capital expenditure as it is occurred for making the asset ready to use.

3. It is a revenue expenditure as it is occurred for the maintenance of the asset.

4.  It is a revenue expenditure as it is a part of the operating costs, which is occurred in business.

You can learn more from here about capital expenditure:

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You can learn more from here about revenue expenditure:

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