CA Foundation Exam > CA Foundation Questions > Rs. 2500, spent on the overhauling on purchas...
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Rs. 2500, spent on the overhauling on purchase of second hand machinery:
- a)Capital expenditure
- b)Revenue expenditure
- c)Deferred revenue expenditure
- d)None of the above
Correct answer is 'A'. Can you explain this answer?
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Verified Answer
Rs. 2500, spent on the overhauling on purchase of second hand machiner...
Rs. 2,500 spent on the overhauling on purchase of second hand machinery to put it in working condition and to derive endurable long- term advantage is a capital expenditure.
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Most Upvoted Answer
Rs. 2500, spent on the overhauling on purchase of second hand machiner...
Capital expenditure
Capital expenditure refers to the expenses incurred on acquiring or improving fixed assets, which are expected to provide benefits over a long period of time. In this case, the amount of Rs. 2500 spent on the overhauling of the second-hand machinery is a capital expenditure.
Reasoning
The amount spent on the overhauling of the second-hand machinery is considered a capital expenditure because it has increased the value of the machinery and is expected to provide benefits over a long period of time.
Implications
Since the amount spent is a capital expenditure, it will be recorded on the balance sheet as an asset and will be depreciated over the useful life of the machinery. This will result in a reduction in the value of the asset over time, which will be reflected in the income statement as depreciation expense.
Conclusion
In conclusion, the amount of Rs. 2500 spent on the overhauling of the second-hand machinery is a capital expenditure because it has increased the value of the machinery and is expected to provide benefits over a long period of time.
Capital expenditure refers to the expenses incurred on acquiring or improving fixed assets, which are expected to provide benefits over a long period of time. In this case, the amount of Rs. 2500 spent on the overhauling of the second-hand machinery is a capital expenditure.
Reasoning
The amount spent on the overhauling of the second-hand machinery is considered a capital expenditure because it has increased the value of the machinery and is expected to provide benefits over a long period of time.
Implications
Since the amount spent is a capital expenditure, it will be recorded on the balance sheet as an asset and will be depreciated over the useful life of the machinery. This will result in a reduction in the value of the asset over time, which will be reflected in the income statement as depreciation expense.
Conclusion
In conclusion, the amount of Rs. 2500 spent on the overhauling of the second-hand machinery is a capital expenditure because it has increased the value of the machinery and is expected to provide benefits over a long period of time.
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Community Answer
Rs. 2500, spent on the overhauling on purchase of second hand machiner...
Answer is "A" because firm making expenditure on second hand machinary, machinary is a capital item so it's a capital exapenditure.
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Rs. 2500, spent on the overhauling on purchase of second hand machinery:a)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is 'A'. Can you explain this answer?
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