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Capital vs Revenue Expenditure

Accountancy

I don't understand how repairs on an asset are considered Revenue Expenditure, such as the example of a damaged bike being repaired. The repairs ensure we can use the bike, so isnt it a capital Expenditure?

Vishnu Muraleedharan

CA Final

★ 32K+

28-Apr-23 13:17

347

Answers (6)

Best Answer

If repairs increase the efficiency of bike then it was in the nature of capital expenditure and if repairs contains on normal wear and tear then it is revenue expenditure

Paras Doshi

CA Inter

★ 3K+

28-Apr-23 15:32

Did it increase performance?

CA Suraj Lakhotia

Admin

28-Apr-23 13:18

CA Suraj Lakhotia Admin

Did it increase performance?

Not exactly. It did make it usable though

Thread Starter

Vishnu Muraleedharan

CA Final

★ 32K+

28-Apr-23 14:06

Made usable to the same extent it was before. If it would increase its efficiency and performance Then it can be capex

Sugam SM

CA Final

★ 9K+

28-Apr-23 15:44

Sugam SM

Made usable to the same extent it was before. If it would increase its efficiency and performance Then it can be capex

oo ok. Thank you, and Good luck

Thread Starter

Vishnu Muraleedharan

CA Final

★ 32K+

28-Apr-23 16:00

Paras Doshi

If repairs increase the efficiency of bike then it was in the nature of capital expenditure and if repairs contains on normal wear and tear then it is revenue expenditure

Ah ok. Thank you, and Good Luck

Thread Starter

Vishnu Muraleedharan

CA Final

★ 32K+

28-Apr-23 16:01