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Chapter 5

Example 1

Required:

Using the table below, classify each of the following items of expenditure
as either capital expenditure or revenue expenditure.

Example 1: Solution

Item of expenditure Classification

A Repainting of a building

Installation of a new central
B
heating system

C Repainting of a delivery van

Providing drainage for a new
D piece of water-extraction
equipment

Legal fees incurred on the
E
purchase of land

Carriage costs for a replacement
F component part for a piece of
machinery

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