In this tutorial, I’m going to share Seven Capital And Revenue Expenditure Examples that Will help you in understanding the Concept of Capital And Revenue Expenditure.

Lets start by first understanding what is Capital Expenditure and Revenue Expenditure.

 

What is Capital Expenditure?

Capital Expenditure is the cost of buying fixed Asset.it includes all expenses incurred in bringing an asset in its workable condition as intended by Management.

 

What is Revenue Expenditure?

Revenue Expenditure is the expenditure incurred in running business on daily basis and its benefit is not spread over more than one year.

 

Seven Capital And Revenue Expenditure Examples

ExpenditureTypes of Expenditure
Expense incurred in Buying a Vehicle of a CompanyCapital Expenditure
Expense incurred in buying Petrol a Vehicle of a CompanyRevenue Expenditure
Buying Machinery for CompanyCapital Expenditure
Maintenance cost of MachineryRevenue Expenditure
Painting of Company VehicleRevenue Expenditure
Professional Fees PaidCapital Expenditure
License Fee for the yearRevenue Expenditure

Explanation of Seven Capital And Revenue Expenditure Examples

  1. Expense incurred in Buying a Vehicle of a Company is Capital Expenditure because it is fixed asset and its benefit is spread over the period of more than one year
  2. Expense incurred in buying Petrol for a Vehicle of a Company is Revenue Expenditure because petrol is used for running day to day business operation and its benefit is spread over the period of one year.
  3. Buying Machinery for Company is Capital Expenditure because it is fixed asset and its benefit is spread over the period of more than one year
  4. Maintenance cost of Machinery is Revenue Expenditure because maintenance is required to be done regularly and its benefit is spread over the period of one year.
  5. Painting of Company Vehicle will not improve life of asset and neither it will improve efficiency of the bus.Hence, it is Classified as Revenue Expenditure.
  6. Professional Fees Paid are the money paid to hire Professionals for buying Fixed Asset and it is the cost required to bring asset in it workable Condition that’s why it is Classified as Capital Expenditure.
  7. License Fee is the money paid to regulatory authorities and it is part of business day to day Expense. Hence, it is Revenue Expenditure