capital vs. revenue - Capital Expenditure Money spent on...

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Capital Expenditure Money spent on acquisition of fixed asset Money spent on addition of value to the existing asset
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Revenue Expenditure Money spent on daily operating activities An asset is not recognized in the balance sheet when expenditure has been incurred for which it is considered improbable that economic benefits will flow to the enterprise.
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§ Capital Costs are incurred in purchasing assets § Revenue Costs are incurred in delivering the goods or services and operating the company § Capital Costs are not charged directly to the Profit & Loss Account. They are reflected in a depreciation charge over their useful life. § Accounting profit = Revenue Income less Revenue Expenditure - Capital expenditure is only deducted from Accounting profit through depreciation § To “capitalise” an item means to treat it as capital expenditure
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Capital vs Revenue expenditure Buying a van Petrol costs for van Repairs to van Putting extra headlights on van
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This note was uploaded on 12/20/2011 for the course MBA 1036 taught by Professor Sn during the Spring '11 term at Great Lakes Christian college.

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capital vs. revenue - Capital Expenditure Money spent on...

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