Question

An amount of Rs. 1,25,000 spent on travelling expenses of the company's directors to a foreign trip for purchase of a plant and machinery is a ________.

• A. Capital Expenditure
• B. Revenue Expenditure
• C. Deferred Revenue Expenditure
• D. None of the above

Answer 1

Answer: (A)

Capital Expenditure

All the incidental expenses incurred on account of procurement of asset to the installation of assets are considered the cost of that asset and to be capitalized.

Therefore, travelling expenses of Rs.125000/- towards travel for purchase of a plant & machine is a capital expenditure.