State with reasons whether the following are Capital or Revenue Expens – InterviewSolution

1.

State with reasons whether the following are Capital or Revenue Expenses:(i) Excise duty paid on purchase of new machine.(ii) Wages paid to install a machine.(iii) Repairs carried out on existing car.(iv) Office block of building repainted for Rs. 50,000.(v) Paid telephone bill Rs. 2,500.

Answer»

Expenditure	Reason
(i) Capital Expenditure	Paid for the acquisition of new asset
(ii) Capital Expenditure	Paid to make the asset ready to use
(iii) Revenue Expenditure	Paid for the running and maintenance of car
(iv) Revenue Expenditure	Paid for the maintenance of Building
(v) Revenue Expenditure	Part of normal operating cost

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