Final answer:
Legal fees incurred on the purchase of a building should be accounted for as capital expenditure since they are part of the cost of acquiring a long-term asset.
The Correct Option is ; A. The annual cost of painting a factory floor
Step-by-step explanation:
The student asked which of the following should be accounted for as capital expenditure:
- The annual cost of painting a factory floor
- The repair of a window in a building
- The purchase of a vehicle by a garage for re-sale
- Legal fees incurred on the purchase of a building
Capital expenditures are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment. It is often used to undertake new projects or investments by the firm.
This can include repairs that extend the useful life of the asset, acquisition of new assets, or legal fees directly related to buying property that will be used by the firm long-term.
Answer D, Legal fees incurred on the purchase of a building, qualifies as a capital expenditure because these fees are necessary for acquiring a long-term asset, in this case, a building that is expected to be used for many years. This legal fee is not a regular expense but rather one that is directly tied to a significant, long-term investment.