State whether the following expenses are capital or revenue in nature: – InterviewSolution

1.

State whether the following expenses are capital or revenue in nature:(i) Expenses on whitewashing and painting of a building purchased to make it ready for use.(ii) Rs. 10,000 spent on construction platform for a new machine.(iii) Repair expenses of Rs. 25,000 incurred for whitewashing of factory building.(iv) Purchased a new car.

Answer»

Expenditure	Reason
(i) Capital Expenditure	Paid to make an asset ready to use
(ii) Capital Expenditure	Paid to make an asset ready to use
(iii) Revenue Expenditure	Made for the maintenance of asset
(iv) Revenue Expenditure	Part of normal operating cost
(v) Capital Expenditure	Used in business for a number of years

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