Question

E9-6B. Revenue and Capital Expenditures Indicate whether each of the following expenditures is a enue expenditure or a capital expenditure for Linda Company: Paid $300 to replace a truck windshield that was cracked by a stone thrown up by another vehicle while the truck was being used to make a delivery. b. Paid $10 for a "No Smoking" sign for the conference room. Paid $900 to add a hard disk to an employee's computer. d. Paid $25 for a dust cover for a computer printer. a. C.

Answer 1

a) Revenue expenditure

An expenditure incurred to an asset can be treated as capital expenditure only when it is incurred, at the time of purchase/installation is made for the first time.

b) Revenue expenditure

As per materiality concept, only the items which have value for the business should be treated as capital expenditure, else it is a revenue.

c) Revenue expenditure

explanation same as (a)

d) Revenue expenditure

explanation same as (b)