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Answers to questions

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 Revenue expenditure

Installation of a new central
B Capital expenditure
heating system

C Repainting of a delivery van Revenue expenditure

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

Legal fees incurred on the
E Capital expenditure
purchase of land

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

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