Week 10 Capital expenditure and revenue expenditure Learning
- Slides: 8
Week 10 Capital expenditure and revenue expenditure Learning Objectives 1. Capital expenditure vs. revenue expenditure P 3 C 24 - 1
Capital expenditure What? • NOT connected to owner’s capital • When business spends money to: – Buy non-current assets & bring it into working condition, – Add to the value to an existing non-current asset i. e. increase performance or life, of a noncurrent asset Examples • Buy non-current assets eg. buy machines • Bringing NCA into business eg. custom duty • Legal costs for buying a building • Carriage inwards for machinery • Any other costs to make NCA ready for use eg. installation C 24 - 2
Revenue expenditure What? • Expenditures incurred for: – running the day-to-day business – maintain the assets in working conditions Examples • Examples – – Repairs of furniture Painting of building Purchase of stationery Salaries C 24 - 3
Capital or Revenue Expenditure? Extension or addition to buildings Capital Expenditure C 24 - 4
Capital or Revenue Expenditure? • Ink cartridges Revenue Expenditure C 24 - 5
Capital or Revenue Expenditure? Office Equipment Capital Expenditure C 24 - 6
Capital or Revenue Expenditure? Salaries Revenue Expenditure C 24 - 7
Capital or Revenue Expenditure? New factory Capital Expenditure C 24 - 8
