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Whitewash is revenue or capital expenditure?.why?
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Whitewash is revenue or capital expenditure?.why?
Whitewash: Revenue or Capital Expenditure?
Whitewashing is the process of covering a surface with a white paint or coating. It is commonly done in buildings, homes, and other structures to give them a fresh and clean appearance. When it comes to accounting, the question arises whether whitewashing is a revenue or capital expenditure. Let's explore this in detail below.
Revenue Expenditure
- Revenue expenditure is the cost of running a business that is incurred in the day-to-day operations of the company.
- It is deducted from the gross income of the business to calculate the net income.
- Whitewashing can be considered a revenue expenditure if it is done to maintain the appearance of the building or structure and does not enhance its value or useful life.
- For example, if a company repaints its office building every year to maintain its appearance, the cost of whitewashing can be considered a revenue expenditure.
Capital Expenditure
- Capital expenditure is the cost of acquiring or upgrading assets that provide long-term benefits to the company.
- It is not deducted from the gross income but is added to the company's balance sheet as an asset.
- Whitewashing can be considered a capital expenditure if it is done to enhance the value or useful life of the building or structure.
- For example, if a company renovates an old building and whitewashes the walls, the cost of whitewashing can be considered a capital expenditure as it has increased the value of the building.
Conclusion
Whether whitewashing is a revenue or capital expenditure depends on the purpose and intention behind the process. If it is done to maintain the appearance of the building, it can be considered a revenue expenditure. However, if it is done to enhance the value or useful life of the building, it can be considered a capital expenditure.
Community Answer
Whitewash is revenue or capital expenditure?.why?
Whitewash is Deferred revenue expenditure because the advantage of whitewash is taken for more than one year. It is not the revenue expenditure because the advantage of these expenditures is taken only for one year.
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Whitewash is revenue or capital expenditure?.why?
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Whitewash is revenue or capital expenditure?.why? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Whitewash is revenue or capital expenditure?.why? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Whitewash is revenue or capital expenditure?.why?.
Whitewash is revenue or capital expenditure?.why? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Whitewash is revenue or capital expenditure?.why? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Whitewash is revenue or capital expenditure?.why?.
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