9 Capital/revenue expenditures LO3 A company incurs the following expenditures r

Question

9 Capital/revenue expenditures LO3 A company incurs the following expenditures related to currently owned non-current assets: annual pressure washing of building, $5000 new engine in delivery truck, $4500 repair of water damage caused by leaking roof, $3500 v " new tyres on tractor, $2000 RE . addition of 1000 square feet of office space, $22 000 CE modifications to machinery to improve efficiency, $7200 Required Identify each expenditure as a capital or revenue expenditure and explain why the accountant should classify the expendit as an expense, or ‘ asset.

Explanation / Answer

Capital Expenditure includes expenditure on Non Current Assets such as Land, Building etc. To Qualify as capital expenditure incurred must results in ethier the acquistion/construction or additional/enhancement of assets Revenue Expenditure is any recurring expenditure incurred for maintainance or repairs S.No Type Classification 1 Revenue Expense 2 Capital Assets (Increase Efficency and Life) 3 Revenue Expense 4 Revenue Expense 5 Capital Assets 6 Capital Assets

Related Questions

Navigate

• Browse (All)
• Browse 9
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.