Capital and revenue

Accountancy

Sir in one of the examples you said that friend took our bike and damaged and some expenses incurred and it is revenue expenditure .. not capital expenditure. But I am thinking it is capital expenditure bcoz new parts we are adding repairing to it so benefit comes over the period of time so it is capital expenditure right? Plz clear this point..

Anil Raj

CA Foundation

★ 580

17-Aug-22 22:20

482

Answers (5)

Best Answer

If any new parts have been replaced which increases the efficiency of the bike,then it is capital expenditure.If expenditure is incurred on the minor parts which is revenue in nature ,then it is revenue expenditure.Hope you understood!

Shankari C

CA Inter

★ 12K+

18-Aug-22 10:09

Unless u add some extraordinary parts which is expected to generate more benifits. Bcz after bike damage u will just add those parts which are damaged Agreed that it is more beneficial then old parts which were added but nonetheless its capacity would remain same not it's durability.

Sugam SM

CA Final

★ 9K+

17-Aug-22 22:43

If u solve more ques u will get about it

Sugam SM

CA Final

★ 9K+

17-Aug-22 22:43

If the Nature Of expenditure is Reccuring then it is Revenue in nature.

Adarsh Chauhan

CA Foundation

★ 5

18-Aug-22 13:19

Capital expenditure is the money spent by a firm to acquire assets or to improve the quality of existing ones. Revenue expenditure is the money spent by business entities to maintain their everyday operations. Capital expenses are incurred for the long-term.

Balachandar S

CA Inter

★ 59K+

19-Aug-22 23:04