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DEFINE CAPITAL EXPENDITURE & REVENUE EXPENDITURE ???

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Jul 9 at 19:13:8
Muhammadbilal
Muhammadbilal
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Capital expenditures are for fixed assets, which are expected to be productive assets for a long period of time. Revenue expenditures are for costs that are related to specific revenue transactions or operating periods, such as the cost of goods sold or repairs and maintenance expense....

EXAMPLE

A piece of machinery has an annual service costing 10000 $.during the most recent service it was decided to replace past of engineering meaning that it will work faster & priduce more units of product per hour.the cost of replacement part is 20000 $.

solution :

1 ) 10,000 $ servicing cost is revenue expenditure , written off to the statement of profit or loss.

2) 20000 $ replacement part enhances future economic benefit and so is capital expenditure &
increases the cost of non current assets in the statment of financial position.
Jul 22 at 18:5:28
Abdul
Abdul
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