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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DOCUMENT INFO
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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