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Wat is the diff.between revenue and capital expenditure?
Wat is meant by deffered revenue expenditure?
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Answer Posted / veeresh dv
Capital expenditure means the amount spent. Capital
expenditure results either in the acquisition of an assets
or an improvement or extension to an existing assets as
result in adding to the earning capacity of that asset
either by increasing the output or reducing the cost of
production. The list of usual capital expenditure are cost
of goodwill, cost of freehold land and building an the
legal charges incurred in this connection etc.
All expenses incurred in running a business such as salaries
, wages, rent, lighting, stationary etc. are classed as
revenue expenditure. Beside expense incurred in putting the
fixed assets in proper order by repairs and renewals are
also revenue expenditures.
Where an amount is expended on an existing on an asset by
way of structural alterations, the question as to whether
such expenditure should be capitalized or be treated as a
revenue charge, will depend on how for such expenditure has
helped to add the earning capacity of asset in
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