Revenue or Capital Expenditure

Repairing a Second Hand Machine
- This is a capital expenditure because it is an expense incurred for the purpose of enhancing the useful life of the machine. The repair is not a regular maintenance expense because it is done to restore the machine to its original condition before it is put to use.

Repainting the Factory
- This is a revenue expenditure because it is an expense incurred for the purpose of maintaining the appearance of the factory. The repainting is a regular maintenance expense that is done periodically to keep the factory in good condition.

Explanation

Capital and revenue expenditures are two types of expenses that businesses incur in their operations. Capital expenditures are expenses that are incurred for the purpose of acquiring, improving or maintaining a long-term asset. These expenses are usually large and are spread over several years. They are recorded as an asset on the balance sheet and are depreciated over their useful life.

Revenue expenditures, on the other hand, are expenses that are incurred for the purpose of maintaining the day-to-day operations of the business. These expenses are usually small and are recorded as an expense on the income statement in the year they are incurred.

In the first scenario where Rs 1000 is spent on repairing a second-hand machine before it is put to use, it is considered a capital expenditure. This is because the repair is done to enhance the useful life of the machine, and it is not a regular maintenance expense. The repair is done to restore the machine to its original condition before it is put to use.

In the second scenario where Rs 5000 is spent on repainting the factory, it is considered a revenue expenditure. This is because the repainting is a regular maintenance expense that is done periodically to maintain the appearance of the factory. The repainting does not enhance the useful life of the factory, but it is necessary to keep it in good condition.

In conclusion, understanding the difference between capital and revenue expenditure is important for businesses to properly record their expenses and determine their taxable income. Capital expenditures are assets that are depreciated over time, while revenue expenditures are expenses that are recorded in the year they are incurred.

1.its capital expenditue because it's a expenditure on fixed assests to become in working condition
2.revenue because painting is daily expenses and it does not increase productivity