Distinguish between capital expenditure and revenue expenditure with examples

2020-02-23 03:55

How can the answer be improved?Jul 26, 2018 Capital expenditure is shown in the Balance Sheet, in asset side, and in the Income Statement (depreciation), but Revenue Expenditure is shown only in the Income Statement. Capital Expenditure is capitalized as opposed to Revenue Expenditure, which is not capitalized. Capital Expenditure is a long term expenditure. Conversely, Revenue Expenditure is a short term expenditure. distinguish between capital expenditure and revenue expenditure with examples

Solution: This expenditure will add nothing to the value of the building and will have no effect on the profitearning capacity of the business, so it is a revenue expenditure. (xxxii) Capital expenditure. Amount spent on painting a new factory is regarded as a part of the cost of factory building, therefore, it is a capital expenditure.

Revenue expenditures are matched against revenues each month, it is not reflected on the balance sheet the way a capital expenditure is. Theyre listed on the Income Statement to calculate the net profit of any accounting period. They can be fully deducted when computing taxes. A practical example: CapEx vs. Revenue Expenditure Feb 13, 2018  Thus, the differences between these two types of expenditures are as follows: Timing. Capital expenditures are charged to expense gradually via depreciation, and over a long period of time. Revenue expenditures are charged to expense in the current period, or shortly thereafter. Consumption. A capital expenditure is assumed to be consumed over the useful life of the related fixed asset. A revenue expendituredistinguish between capital expenditure and revenue expenditure with examples Apr 13, 2017 The following points of difference between capital expenditure and revenue expenditure gives the importance of the distinction: 1. Capital expenditure increases the earning capacity of business whereas revenue expenditure is incurred to maintain t