Capital Vs Revenue Expenditure

Accountancy

Sir, why the horn repair is considered as revenue? Repairing the horn or changing the battery are not done regularly and are not an ongoing expenses like the service of bike (eg- engine oil change or changing the nut and bolts). Then why are we considering it as a revenue expense? Video Details ------------- Accounting - CA Foundation (New) Capital And Revenue Expenditures and Receipts #1. Introduction to Capital Vs. Revenue Expenditure

Vignesh Venkatesan

CA Final

★ 5

04-Aug-25 07:16

260

Answers (1)

Best Answer

Horn repair and battery changes are considered revenue expenses because they restore the vehicle to its original working condition and do not enhance its value, prolong its useful life, or increase its capacity. However if you consider the battery cost to be significant - for e.g in case of EV, then you will depreciate battery separately and rest of car separately. You will understand this in AS-10/Ind AS 16 - component depreciation. Once the battery useful life is over, the battery is derecognised and new battery is capitalised

CA Suraj Lakhotia

Admin

04-Aug-25 09:55