Question

An expenditure incurred relating to fixed asset resulting in increase in capacity of the asset should be_____________.

• A. Charges to P&L a/c.
• B. Added to gross book value of asset.
• C. Added to net book value of asset.
• D. Treated as deferred revenue expenditure.

Answer 1

The correct option is B Added to gross book value of asset.

An expenditure incurred relating to fixed asset resulting in increase in capacity of the asset should be added to the gross book value of asset. They are not charged to P & L because they are expected to provide value and can be consumed over a period of time.