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Amount spent on increasing the seating capacity in a cinema hall is:
- a)Capital expenditure
- b)Revenue expenditure
- c)Deferred Revenue expenditure
- d)None
Correct answer is option 'A'. Can you explain this answer?
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Amount spent on increasing the seating capacity in a cinema hall is:a)...
Any amount spent to enhance the capacity of the business and gives the benefit for a long duration are considered as capital expenditure.
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Amount spent on increasing the seating capacity in a cinema hall is:a)...
Capital Expenditure for Increasing Seating Capacity in a Cinema Hall
Capital expenditure refers to the money spent on acquiring or improving a long-term asset that will provide benefits to the company for more than one accounting period. Increasing the seating capacity in a cinema hall is a capital expenditure because it involves acquiring or improving a long-term asset that will provide benefits to the company for more than one accounting period.
Here are some reasons why increasing the seating capacity is considered a capital expenditure:
1. Long-term benefits: Increasing the seating capacity will provide long-term benefits to the cinema hall. It will increase the revenue potential of the business by allowing more customers to attend movies.
2. Asset acquisition: Increasing the seating capacity involves acquiring or improving a long-term asset, such as building new seats or renovating the existing ones.
3. Depreciation: The cost of increasing the seating capacity will be depreciated over the useful life of the asset. This means that the cost will be spread over several years, reflecting the long-term benefits of the investment.
In conclusion, increasing the seating capacity in a cinema hall is considered a capital expenditure because it involves acquiring or improving a long-term asset that will provide benefits to the company for more than one accounting period.
Capital expenditure refers to the money spent on acquiring or improving a long-term asset that will provide benefits to the company for more than one accounting period. Increasing the seating capacity in a cinema hall is a capital expenditure because it involves acquiring or improving a long-term asset that will provide benefits to the company for more than one accounting period.
Here are some reasons why increasing the seating capacity is considered a capital expenditure:
1. Long-term benefits: Increasing the seating capacity will provide long-term benefits to the cinema hall. It will increase the revenue potential of the business by allowing more customers to attend movies.
2. Asset acquisition: Increasing the seating capacity involves acquiring or improving a long-term asset, such as building new seats or renovating the existing ones.
3. Depreciation: The cost of increasing the seating capacity will be depreciated over the useful life of the asset. This means that the cost will be spread over several years, reflecting the long-term benefits of the investment.
In conclusion, increasing the seating capacity in a cinema hall is considered a capital expenditure because it involves acquiring or improving a long-term asset that will provide benefits to the company for more than one accounting period.
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Amount spent on increasing the seating capacity in a cinema hall is:a)Capital expenditureb)Revenue expenditurec)Deferred Revenue expenditured)NoneCorrect answer is option 'A'. Can you explain this answer?
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