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Classify the following expenditures as capital or revenue expenditure: (i) Complete repaint of existing building. (ii) Amount paid for removal of stock to a new site. (iii) Travelling expenses of the directors for trips abroad for purchase of capital assets. (iv) Cost of repairs on second-hand car purchased to bring it into working condition. (v) Rings and Pistons of an engine were changed at a cost of Rs. 5,000 to get fuel efficiency?
Most Upvoted Answer
Classify the following expenditures as capital or revenue expenditure:...
Capital or Revenue Expenditure
(i) Complete repaint of existing building – Capital Expenditure
(ii) Amount paid for removal of stock to a new site – Capital Expenditure
(iii) Travelling expenses of the directors for trips abroad for purchase of capital assets – Capital Expenditure
(iv) Cost of repairs on second-hand car purchased to bring it into working condition – Revenue Expenditure
(v) Rings and Pistons of an engine were changed at a cost of Rs. 5,000 to get fuel efficiency – Revenue Expenditure
Explanation
Capital Expenditure: Capital expenditures are the expenses incurred for the purpose of acquiring or improving a capital asset. These expenses provide benefits over a longer period of time and result in an increase in the value of the asset. Capital expenditures are usually one-time expenses.
Revenue Expenditure: Revenue expenditures are the expenses incurred for the purpose of maintaining or running a business. These expenses provide benefits only for a short period of time and do not result in an increase in the value of the asset. Revenue expenditures are recurring expenses.
(i) Complete repaint of existing building – Capital Expenditure: Repainting the entire building is a capital expenditure because it improves the appearance and value of the building and provides benefits over a longer period of time.
(ii) Amount paid for removal of stock to a new site – Capital Expenditure: The amount paid for the removal of stock to a new site is a capital expenditure because it is incurred for the purpose of acquiring a new asset, i.e., the new site.
(iii) Travelling expenses of the directors for trips abroad for purchase of capital assets – Capital Expenditure: The travelling expenses of the directors for trips abroad for the purchase of capital assets are a capital expenditure because they are incurred for the purpose of acquiring a capital asset.
(iv) Cost of repairs on second-hand car purchased to bring it into working condition – Revenue Expenditure: The cost of repairs on a second-hand car purchased to bring it into working condition is a revenue expenditure because it is incurred for the purpose of maintaining the car, which is a revenue asset.
(v) Rings and Pistons of an engine were changed at a cost of Rs. 5,000 to get fuel efficiency – Revenue Expenditure: The cost of changing the rings and pistons of an engine to get fuel efficiency is a revenue expenditure because it is incurred for the purpose of maintaining the engine, which is a revenue asset. The fuel efficiency gained from the repair provides benefits only for a short period of time and does not result in an increase in the value of the engine.
(i) Complete repaint of existing building – Capital Expenditure
(ii) Amount paid for removal of stock to a new site – Capital Expenditure
(iii) Travelling expenses of the directors for trips abroad for purchase of capital assets – Capital Expenditure
(iv) Cost of repairs on second-hand car purchased to bring it into working condition – Revenue Expenditure
(v) Rings and Pistons of an engine were changed at a cost of Rs. 5,000 to get fuel efficiency – Revenue Expenditure
Explanation
Capital Expenditure: Capital expenditures are the expenses incurred for the purpose of acquiring or improving a capital asset. These expenses provide benefits over a longer period of time and result in an increase in the value of the asset. Capital expenditures are usually one-time expenses.
Revenue Expenditure: Revenue expenditures are the expenses incurred for the purpose of maintaining or running a business. These expenses provide benefits only for a short period of time and do not result in an increase in the value of the asset. Revenue expenditures are recurring expenses.
(i) Complete repaint of existing building – Capital Expenditure: Repainting the entire building is a capital expenditure because it improves the appearance and value of the building and provides benefits over a longer period of time.
(ii) Amount paid for removal of stock to a new site – Capital Expenditure: The amount paid for the removal of stock to a new site is a capital expenditure because it is incurred for the purpose of acquiring a new asset, i.e., the new site.
(iii) Travelling expenses of the directors for trips abroad for purchase of capital assets – Capital Expenditure: The travelling expenses of the directors for trips abroad for the purchase of capital assets are a capital expenditure because they are incurred for the purpose of acquiring a capital asset.
(iv) Cost of repairs on second-hand car purchased to bring it into working condition – Revenue Expenditure: The cost of repairs on a second-hand car purchased to bring it into working condition is a revenue expenditure because it is incurred for the purpose of maintaining the car, which is a revenue asset.
(v) Rings and Pistons of an engine were changed at a cost of Rs. 5,000 to get fuel efficiency – Revenue Expenditure: The cost of changing the rings and pistons of an engine to get fuel efficiency is a revenue expenditure because it is incurred for the purpose of maintaining the engine, which is a revenue asset. The fuel efficiency gained from the repair provides benefits only for a short period of time and does not result in an increase in the value of the engine.
Community Answer
Classify the following expenditures as capital or revenue expenditure:...
Capital expend
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Classify the following expenditures as capital or revenue expenditure: (i) Complete repaint of existing building. (ii) Amount paid for removal of stock to a new site. (iii) Travelling expenses of the directors for trips abroad for purchase of capital assets. (iv) Cost of repairs on second-hand car purchased to bring it into working condition. (v) Rings and Pistons of an engine were changed at a cost of Rs. 5,000 to get fuel efficiency?
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Classify the following expenditures as capital or revenue expenditure: (i) Complete repaint of existing building. (ii) Amount paid for removal of stock to a new site. (iii) Travelling expenses of the directors for trips abroad for purchase of capital assets. (iv) Cost of repairs on second-hand car purchased to bring it into working condition. (v) Rings and Pistons of an engine were changed at a cost of Rs. 5,000 to get fuel efficiency? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Classify the following expenditures as capital or revenue expenditure: (i) Complete repaint of existing building. (ii) Amount paid for removal of stock to a new site. (iii) Travelling expenses of the directors for trips abroad for purchase of capital assets. (iv) Cost of repairs on second-hand car purchased to bring it into working condition. (v) Rings and Pistons of an engine were changed at a cost of Rs. 5,000 to get fuel efficiency? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Classify the following expenditures as capital or revenue expenditure: (i) Complete repaint of existing building. (ii) Amount paid for removal of stock to a new site. (iii) Travelling expenses of the directors for trips abroad for purchase of capital assets. (iv) Cost of repairs on second-hand car purchased to bring it into working condition. (v) Rings and Pistons of an engine were changed at a cost of Rs. 5,000 to get fuel efficiency?.
Classify the following expenditures as capital or revenue expenditure: (i) Complete repaint of existing building. (ii) Amount paid for removal of stock to a new site. (iii) Travelling expenses of the directors for trips abroad for purchase of capital assets. (iv) Cost of repairs on second-hand car purchased to bring it into working condition. (v) Rings and Pistons of an engine were changed at a cost of Rs. 5,000 to get fuel efficiency? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Classify the following expenditures as capital or revenue expenditure: (i) Complete repaint of existing building. (ii) Amount paid for removal of stock to a new site. (iii) Travelling expenses of the directors for trips abroad for purchase of capital assets. (iv) Cost of repairs on second-hand car purchased to bring it into working condition. (v) Rings and Pistons of an engine were changed at a cost of Rs. 5,000 to get fuel efficiency? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Classify the following expenditures as capital or revenue expenditure: (i) Complete repaint of existing building. (ii) Amount paid for removal of stock to a new site. (iii) Travelling expenses of the directors for trips abroad for purchase of capital assets. (iv) Cost of repairs on second-hand car purchased to bring it into working condition. (v) Rings and Pistons of an engine were changed at a cost of Rs. 5,000 to get fuel efficiency?.
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