# Identification of Capital or Revenue Expenditure

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Sub: Finance                                                           Topic: Financial Accounting

Identification of Capital or Revenue Expenditure
Question:
For each of the following situations, indicate whether it is capital (C) or revenue (R) expenditure.

A. Purchased land and a building at a cost of \$750,000 by paying \$200,000 down and signing a 2
year note payable for the remainder.

B. Spent \$235 on a tune-up for a truck used in making deliveries.

C. The owner of a restaurant paid a plumber \$400 to install a new dishwasher in the kitchen.

D. Paid \$1,300 in sales tax on a new delivery van when registering the van at the Registry of
Motor Vehicles.

E. A new machine was accidently damaged during installation. The Uninsured cost to repair the
machine was \$1,250.

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D
Sub: Finance                                                           Topic: Financial Accounting

Solution:
A. Capital Expenditure

B. Revenue Expenditure

C. capital Expenditure

D. Capital Expenditure

E. Capital Expenditure

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D
Sub: Finance                                                           Topic: Financial Accounting

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Description: "A. Purchased land and a building at a cost of \$750,000 by paying \$200,000 down and signing a 2 year note payable for the remainder. B. Spent \$235 on a tune-up for a truck used in making deliveries. C. The owner of a restaurant paid a plumber \$400 to install a new dishwasher in the kitchen. D. Paid \$1,300 in sales tax on a new delivery van when registering the van at the Registry of Motor Vehicles. E. A new machine was accidently damaged during installation. The Uninsured cost to repair the machine was \$1,250. "
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