Capital expenditure mean all such expenditure which are incurred on purchase on fixed asset, there extension or increase in their earning capacity are called as capital expenditure.
The following expenses are considered as capital expenditure:
– Expenditure incurred on purchase, construction and expansion of fixed assets(tangible and intangible)
– Expenses on legal formalities such as brokerage, commission, stamp duty etc. on purchase of fixed assets.
– Expenses incurred on installation of fixed assets.
– Travelling expenses for the purchase of fixed assets.
– Expenses incurred on bringing the the acids to the place of business.
– Insurance expenses
– Architect fee
– repair and renewal of used, old or second hand property which will increase the earning capacity.
Revenue expenditure means the expenses which provide benefits in one accounting. only is revenue expenditure it does not increase the earning capacity calling expenditure covered under revenue expenditure :
– Purchase good are Raw-material.
– payment of wages, salary, rent, production and administration expenses.
– Expenses incurred on repairs renewals and maintenance of fixed assets.
– Selling and distribution expenses, advertisement expenses, packaging
expenses, commission etc.
– Depreciation on fixed assets.
– Interest on loan etc.
– Nehal Sharma