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Capital expenditure and revenue expenditure

Accountancy

₹ 5000 spent on addition to machinery in order to increase the production capacity is Capital or revenue expenditure Please state with reason

Devi sri K

CA Foundation

★ 7K+

17-Nov-23 07:28

291

Answers (2)

Best Answer

If a expense to the fixed asset either prolongs it's life or increases its capacity, then it is a capital expenditure. If not then it is a revenue expenditure. So the answer is capital expenditure.

Ashwin Kumar

CA Inter

★ 12K+

17-Nov-23 09:06

Ashwin Kumar

If a expense to the fixed asset either prolongs it's life or increases its capacity, then it is a capital expenditure. If not then it is a revenue expenditure. So the answer is capital expenditure.

Understood tq

Thread Starter

Devi sri K

CA Foundation

★ 7K+

17-Nov-23 18:21