Revenue expenditure is 30000 that is of cartage where capital expenditure is 150000 (amount of furniture used to furnishing the office)

Capital Expenditure and Revenue Expenditure

To calculate the amount of capital expenditure and revenue expenditure, we need to understand the nature of these expenses.

Capital Expenditure:
Capital expenditure refers to the expenses incurred for acquiring or improving long-term assets that are expected to benefit the business for more than one accounting period. These expenses are not fully consumed in the current period but are spread over their useful life.

Examples of capital expenditure include the purchase of land, buildings, machinery, equipment, vehicles, and furniture that are used in the business for an extended period.

Revenue Expenditure:
Revenue expenditure, on the other hand, is the expenses incurred in the day-to-day operations of the business, which are consumed within the current accounting period and do not result in the acquisition of long-term assets.

Examples of revenue expenditure include salaries, rent, utilities, repairs, advertising, and general administrative expenses.

Given Information:
Atul purchased furniture for 450,000 and paid 30,000 for cartage. It is mentioned that 1/3 of the furniture purchased was to be used in furnishing the office.

Calculating Capital Expenditure:
To determine the capital expenditure, we need to identify the portion of the furniture that is considered a long-term asset. Since 1/3 of the furniture is used in furnishing the office, we can calculate the cost of the furniture used for the office.

Cost of Furniture Used for Office = (1/3) * 450,000
= 150,000

Therefore, the capital expenditure is 150,000.

Calculating Revenue Expenditure:
To calculate the revenue expenditure, we need to consider the remaining portion of the furniture, which is not used for office furnishing. This includes the cost of the furniture and the cartage paid.

Cost of Furniture not used for Office = 450,000 - 150,000
= 300,000

Revenue Expenditure = Cost of Furniture not used for Office + Cartage
= 300,000 + 30,000
= 330,000

Therefore, the revenue expenditure is 330,000.

Summary:
- Capital expenditure refers to expenses incurred for acquiring or improving long-term assets.
- Revenue expenditure includes day-to-day operational expenses.
- The cost of furniture used for office furnishing is considered capital expenditure, which amounts to 150,000.
- The remaining cost of furniture and the cartage paid is considered revenue expenditure, which amounts to 330,000.