Question

Which of the following factors is important in distinguishing between capital and revenue expenditures?A) The expenditure improves the property, adding to the value of the property.B) The expenditure provides a betterment, adding to the value of the property.C) The expenditure restores the property.D) All of the above.

Answer 1

D) All of the above.

Step-by-step explanation:

Capital expenditure includes costs incurred on the acquisition of a fixed asset and any subsequent expenditure that increases the earning capacity of an existing fixed asset.

Revenue expenditure incurred on fixed assets include costs that are aimed at 'maintaining' rather than enhancing the earning capacity of the assets.

All the three options given are distinguishing features between capital and revenue expenditures.