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A new machine was purchased in Delhi and brought to Jaipur factory site for installation. The machine was damaged during transit and repair expenses were incurred amounting to Rs. 20,000. Such repair will be treated as:
- a)Revenue expenses
- b)Capital expenditure
- c)Deferred revenue expenditure
- d)Reserve
Correct answer is option 'B'. Can you explain this answer?
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Verified Answer
A new machine was purchased in Delhi and brought to Jaipur factory sit...
Explanation: Capital expenditure is the amount spent on acquiring or improving long-term assets such as equipment, buildings or land. This type of expenditure is made with the aim of enhancing the productive life, capacity or efficiency of the asset. In this case, the machine was brought for installation in the factory, which implies that it was meant for long-term use for production purposes. The cost incurred for its repair due to damage during transit is therefore a capital expenditure because it is a once-off cost that will benefit the business in the long term.
Most Upvoted Answer
A new machine was purchased in Delhi and brought to Jaipur factory sit...
Explanation:
The repair expenses incurred on the machine during transit will be considered as revenue expenses. The reasons are explained below:
Nature of Expenses:
The repair expenses incurred on the machine are of a revenue nature as they are incurred to bring the machine back to its original working condition. These expenses do not enhance the earning capacity or useful life of the machine in any manner.
Purpose of Expenses:
The repair expenses incurred on the machine are incurred to make the machine operational for its intended use. The expenses are not incurred to add any new feature or to extend the life of the machine.
Treatment of Expenses:
The expenses incurred on the machine during transit are treated as revenue expenses as they do not add any value to the machine. These expenses are charged to the Profit and Loss account in the year in which they are incurred.
Conclusion:
In conclusion, the repair expenses incurred on the machine during transit will be treated as revenue expenses as they are of a revenue nature, incurred to make the machine operational for its intended use, and charged to the Profit and Loss account in the year in which they are incurred.
The repair expenses incurred on the machine during transit will be considered as revenue expenses. The reasons are explained below:
Nature of Expenses:
The repair expenses incurred on the machine are of a revenue nature as they are incurred to bring the machine back to its original working condition. These expenses do not enhance the earning capacity or useful life of the machine in any manner.
Purpose of Expenses:
The repair expenses incurred on the machine are incurred to make the machine operational for its intended use. The expenses are not incurred to add any new feature or to extend the life of the machine.
Treatment of Expenses:
The expenses incurred on the machine during transit are treated as revenue expenses as they do not add any value to the machine. These expenses are charged to the Profit and Loss account in the year in which they are incurred.
Conclusion:
In conclusion, the repair expenses incurred on the machine during transit will be treated as revenue expenses as they are of a revenue nature, incurred to make the machine operational for its intended use, and charged to the Profit and Loss account in the year in which they are incurred.
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Community Answer
A new machine was purchased in Delhi and brought to Jaipur factory sit...
A) capital expenditure
According to cost concept , assets are recorded in the books of account at their purchase price,which includes transportation, installation and all charges that are incurred to making the asset ready to use.
According to cost concept , assets are recorded in the books of account at their purchase price,which includes transportation, installation and all charges that are incurred to making the asset ready to use.
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A new machine was purchased in Delhi and brought to Jaipur factory site for installation. The machine was damaged during transit and repair expenses were incurred amounting to Rs. 20,000. Such repair will be treated as:a)Revenue expensesb)Capital expenditurec)Deferred revenue expenditured)ReserveCorrect answer is option 'B'. Can you explain this answer?
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A new machine was purchased in Delhi and brought to Jaipur factory site for installation. The machine was damaged during transit and repair expenses were incurred amounting to Rs. 20,000. Such repair will be treated as:a)Revenue expensesb)Capital expenditurec)Deferred revenue expenditured)ReserveCorrect answer is option 'B'. Can you explain this answer? 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 A new machine was purchased in Delhi and brought to Jaipur factory site for installation. The machine was damaged during transit and repair expenses were incurred amounting to Rs. 20,000. Such repair will be treated as:a)Revenue expensesb)Capital expenditurec)Deferred revenue expenditured)ReserveCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A new machine was purchased in Delhi and brought to Jaipur factory site for installation. The machine was damaged during transit and repair expenses were incurred amounting to Rs. 20,000. Such repair will be treated as:a)Revenue expensesb)Capital expenditurec)Deferred revenue expenditured)ReserveCorrect answer is option 'B'. Can you explain this answer?.
A new machine was purchased in Delhi and brought to Jaipur factory site for installation. The machine was damaged during transit and repair expenses were incurred amounting to Rs. 20,000. Such repair will be treated as:a)Revenue expensesb)Capital expenditurec)Deferred revenue expenditured)ReserveCorrect answer is option 'B'. Can you explain this answer? 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 A new machine was purchased in Delhi and brought to Jaipur factory site for installation. The machine was damaged during transit and repair expenses were incurred amounting to Rs. 20,000. Such repair will be treated as:a)Revenue expensesb)Capital expenditurec)Deferred revenue expenditured)ReserveCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A new machine was purchased in Delhi and brought to Jaipur factory site for installation. The machine was damaged during transit and repair expenses were incurred amounting to Rs. 20,000. Such repair will be treated as:a)Revenue expensesb)Capital expenditurec)Deferred revenue expenditured)ReserveCorrect answer is option 'B'. Can you explain this answer?.
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