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XYZ Limited has a house for 3 years. It used it as guest house. Now it incurred an expenditure for Rs. 2,50,000 for repairing the roof of this house. Expenses incurred on such repairs are:-
- a)Capital Expenditure
- b)Deferred Revenue Expenditure
- c)Revenue Expenditure
- d)None of the above.
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
XYZ Limited has a house for 3 years. It used it as guest house. Now it...
Revenue Expenditure
Expenditure incurred on repairs of an existing asset, such as a house, is considered as revenue expenditure. Revenue expenditure is incurred in the normal course of business and is incurred to maintain the existing level of operations. In this case, XYZ Limited incurred an expenditure of Rs. 2,50,000 for repairing the roof of a house that it has owned for 3 years, which is used as a guest house. This expenditure is incurred to maintain the house and keep it in a usable condition, rather than adding to its value.
Capital expenditure, on the other hand, is incurred to acquire or improve an asset, such as buying a new house or building an extension to an existing one.
Deferred Revenue Expenditure is a type of expenditure which provides benefits over a number of accounting periods. In this case, the expenditure is incurred only once.
So, the answer is option 3 "Revenue Expenditure"
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XYZ Limited has a house for 3 years. It used it as guest house. Now it...
Revenue Expenditure
The expenditure incurred by XYZ Limited for repairing the roof of the guest house is a revenue expenditure.
Explanation:
Revenue expenditure is an expenditure that is incurred in the ordinary course of business for maintaining the earning capacity of the business. It is a recurring expenditure that is incurred frequently to keep the assets of the business in good working condition.
In the given case, the expenditure of Rs. 2,50,000 incurred by XYZ Limited for repairing the roof of the guest house is a revenue expenditure because it is necessary to maintain the earning capacity of the business. The guest house is used by the company to entertain its guests, and the repair of the roof is essential to ensure that the guests are comfortable and safe. Hence, it is a revenue expenditure.
Capital expenditure refers to the expenditure incurred to acquire or improve a fixed asset that will benefit the business for a longer period. Deferred revenue expenditure refers to the expenditure that is incurred for a long-term benefit but is written off over a period of time. The expenditure incurred by XYZ Limited for repairing the roof of the guest house is not a capital expenditure or deferred revenue expenditure as it does not result in the acquisition or improvement of a fixed asset, and its benefit is not spread over a longer period.
The expenditure incurred by XYZ Limited for repairing the roof of the guest house is a revenue expenditure.
Explanation:
Revenue expenditure is an expenditure that is incurred in the ordinary course of business for maintaining the earning capacity of the business. It is a recurring expenditure that is incurred frequently to keep the assets of the business in good working condition.
In the given case, the expenditure of Rs. 2,50,000 incurred by XYZ Limited for repairing the roof of the guest house is a revenue expenditure because it is necessary to maintain the earning capacity of the business. The guest house is used by the company to entertain its guests, and the repair of the roof is essential to ensure that the guests are comfortable and safe. Hence, it is a revenue expenditure.
Capital expenditure refers to the expenditure incurred to acquire or improve a fixed asset that will benefit the business for a longer period. Deferred revenue expenditure refers to the expenditure that is incurred for a long-term benefit but is written off over a period of time. The expenditure incurred by XYZ Limited for repairing the roof of the guest house is not a capital expenditure or deferred revenue expenditure as it does not result in the acquisition or improvement of a fixed asset, and its benefit is not spread over a longer period.
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XYZ Limited has a house for 3 years. It used it as guest house. Now it incurred an expenditure for Rs. 2,50,000 for repairing the roof of this house. Expenses incurred on such repairs are:-a)Capital Expenditureb)Deferred Revenue Expenditurec)Revenue Expenditured)None of the above.Correct answer is option 'C'. Can you explain this answer?
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XYZ Limited has a house for 3 years. It used it as guest house. Now it incurred an expenditure for Rs. 2,50,000 for repairing the roof of this house. Expenses incurred on such repairs are:-a)Capital Expenditureb)Deferred Revenue Expenditurec)Revenue Expenditured)None of the above.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about XYZ Limited has a house for 3 years. It used it as guest house. Now it incurred an expenditure for Rs. 2,50,000 for repairing the roof of this house. Expenses incurred on such repairs are:-a)Capital Expenditureb)Deferred Revenue Expenditurec)Revenue Expenditured)None of the above.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for XYZ Limited has a house for 3 years. It used it as guest house. Now it incurred an expenditure for Rs. 2,50,000 for repairing the roof of this house. Expenses incurred on such repairs are:-a)Capital Expenditureb)Deferred Revenue Expenditurec)Revenue Expenditured)None of the above.Correct answer is option 'C'. Can you explain this answer?.
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