Distinction between Capital & Revenue expenditure

2007-03-29 7:24 am
如題:
Distinction between Capital & Revenue expenditure

回答 (1)

2007-03-29 9:27 am
✔ 最佳答案
It is generally accepted that expenditure would be considered to be capital in nature if it was incurred in relation to the fixed capital structure of a business and is not expected to recur at regular intervals. For example, purchase or installation of fixed assets.

And revenue expenditure was incurred in relation to the daily operation to maintain the business or earn the profit. For example, electricity, salary and etc.

Elements to consider whether the expenditure is capital or revenue:-
What is the nature of the payment? Is there a single non-recurrent lump sum, paid once for all, on the one hand, or are there to be recurrent payments, made, for example, for periods commensurate with those payments?

What is to be obtained by the payment? Is it some asset with lasting or enduring qualities, or is it something cannot be described as an asset, whether tangible or intangible?


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