A revenue expenditure and a capital expenditure depends on the Accounting Standard(AS) of the company and specific company policies. According to generally accepted accounting principles(GAAP), any assets that has a life more than one year can be considered as a capital asset. However, it can be time consuming and complex.
– If the wages and salary are paid for creating a permanent assets of the company or increasing its earning capacity during the financial period that time it will be treated as capital expenditure of the company.
– If carriage and freight charges incurred for bringing a fixed asset to the place of business than it will be treated as capital expenditure.
– Repair of an old machinery of a company or a building purchase for keeping in the business in making it useful.
– The expenses which are used in development like mines, tea and Rubber plantation ,they provide returns after a long span of time than it is include in capital assets.
– Interest paid on amount borrowed for construction of factory, plant building.
-The raw materials which is used for creating a permanent assets for the company use is also include in capital expenditure.
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Nehal ji its very good content
Thanks for this blog
it will be very helpful for commerce students