Question

Fees paid to lawyer for drawing a purchase deed of land is__________.

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

Answer 1

Answer: (A)

Capital expenditure

Capital Expenditures are for fixed assets, which are expected to be productive assets for a long period of time. Land is a productive asset and GAAP requires that it should be capitalized as an asset in Balance sheet and all the sums spent upto the point an asset is ready for use should also be treated as capital expenditure.