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Question
State, whether you would consider the following as Capital Expenditure or Revenue Expenditure.
Cost of director's trip abroad for purchase of a new plant.
Solution
Capital Expenditure
Reason:
Capital Expenditure refers to the cost of acquiring a new asset.
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RELATED QUESTIONS
Expenditure incurred ₹ 20,000 for trial run of a newly installed machinery will be ______.
Expenses incurred to repair a second-hand machine, purchase by the firm, to make it usable are treated under which expenditure?
Match the Column I and Column II:
| Column - I | Column - II | ||
| (a) | Capital Expenditure | i | Repairs costing ₹ 600 carried out on a boiler. |
| (b) | Revenue Expenditure | ii | Advertising expenses ₹ 25,000 incurred for launching a new product in the market. |
| (c) | Deferred Revenue Expenditure | iii | Interest received. |
| (d) | Revenue Receipts | iv | A sum of ₹ 15,000 spent on the overhauling of a second-hand delivery van. |
Why is it necessary to differentiate between capital and revenue items in accounting?
State whether the following is Capital, Revenue or Deferred Revenue Expenditure.
Cartage paid on purchase of furniture.
Classify the following into Capital, Revenue and Deferred Revenue Expenditures, reason for your answer.
Temporary huts built at a cost of ₹ 3,000 for construction of factory buildings. The huts were demolished when the factory building was ready.
State whether the following expense is Capital or Revenue.
Purchase of a computer for the office.
Classify the following into Capital and Revenue Expenditure.
Money spent on extension of factory premises.
In the following case indicate the amount to be debited as Capital Expenditure and Revenue Expenditure:
A total expenditure of ₹ 50,000 was incurred on factory buildings out of this 20% related to repairs and 80% related to extensions.
Classify the following into capital expenditure and revenue expenditure.
Money spent on overhauling of office van.
