Question

RS. 10000 was paid as brokerage on issue of shares and other expenses of issue were RS. 25000 is capital or revenue expenditure​

Answer 1

it is a revenue expenditure

Answer 2

Answer:

Expenses incurred in raising capital will be considered capital expenditures. Therefore, brokerage and other expenses on the issue are to be considered capital in nature.

Capital expenditure:

• Expenditure is the amount spent on essential items or long-term services.
• We will continue to profit from these costs this year and next year
• Expenditure lasts for more than one year.
• It will be posted on the Balance sheet.
• These costs will be capitalized.
• It is not repetitive in nature.
• Improving performance or growing a business
• This does not apply to large receipts
• It has no sub-categories.

Revenue expenditure:

• Expenditure is the amount spent on several items or services in the short term.
• we will receive a benefit of these costs in the current year only
• Expenditure has a period of up to one year.
• It will be sent to the Trading and Profit / Loss account.
• These costs will not be capitalized.
• It always happens in nature. To harness existing business potential.
• This is accompanied by receipts of income to know the profit/loss for the year.
• It has two stages. Direct Costs and Indirect Costs