Week 9 Capital expenditure and revenue expenditure Learning

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Week 9 Capital expenditure and revenue expenditure Learning Objectives 1. Capital expenditure vs. revenue

Week 9 Capital expenditure and revenue expenditure Learning Objectives 1. Capital expenditure vs. revenue expenditure P 3

Differences between capital expenditure and revenue expenditure Capital expenditure • Expenditures for noncurrent assets

Differences between capital expenditure and revenue expenditure Capital expenditure • Expenditures for noncurrent assets that provides benefits to the business for more than one accounting period • Purchase of land, building, equipment Revenue expenditure • Expenditures that provides benefits to the business for only the current accounting period • Salaries and wages, rent, maintenance cost, motor repair

CAPITAL EXPENDITURES What? • When business spends money to: – Buy non-current assets &

CAPITAL EXPENDITURES What? • 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-currents assets Eg: buy machines • Cost of bringing (carriage inwards) non-current assets into business Eg: Custom duty • Legal costs for buying a building • Any other costs to make noncurrent assets ready for use Eg: Installation of machine

REVENUE EXPENDITURES Examples What? • Expenditures incurred for: – Running the day-to-day business –

REVENUE EXPENDITURES Examples What? • Expenditures incurred for: – Running the day-to-day business – Maintain the assets in working conditions • Examples – – Repairs of furniture Painting of building Purchase of stationery Salaries

Capital or Revenue Expenditure? Extension or addition to buildings Capital Expenditure

Capital or Revenue Expenditure? Extension or addition to buildings Capital Expenditure

Capital or Revenue Expenditure? Ink cartridges Revenue Expenditure

Capital or Revenue Expenditure? Ink cartridges Revenue Expenditure

Capital or Revenue Expenditure? Office Equipment Capital Expenditure

Capital or Revenue Expenditure? Office Equipment Capital Expenditure

Capital or Revenue Expenditure? Salaries Revenue Expenditure

Capital or Revenue Expenditure? Salaries Revenue Expenditure

Capital or Revenue Expenditure? New factory Capital Expenditure

Capital or Revenue Expenditure? New factory Capital Expenditure