Question

Mr. Amapo Bunkers, President & CEO of Bunkers, Inc. argues that from accounting perspective,
           the distinction between capital expenditure and revenue expenditure is time-wasting and
           unnecessary. He points out that as long as an item of expenditure is recorded, it does not matter
           whether it is recorded as capital expenditure or as revenue expenditure, as the effect on the
           financial statements will be the same. Do you agree with Mr. Bunkers? Explain in detail, giving
           specific reasons and examples why you agree or disagree with Mr. Bunkers.

Answer 1

Do not agree

Capital expenditure are like expenditure made on assets which can give you long term benefit

Revenue expenditure is which will give you benefit for shorter period

Capital expenditure and revenue expenditure both treated differently in financial statements

Capital expenditure is to be included in the assets for which the expenditure incurred

And revenue expenditure is shown in the income statements

Example

capital expenditure is spare part purchased of machinery

Revenue expenditure is maintainance cost of the machinery

Hope this will help you