Question

Immediately after purchasing a new truck, Rs 1,000 is paid to have the name of the company and other advertising material painted on the truck. Such expense of Rs 1,000 is a ___________.

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

Answer 1

The correct option is C Revenue Expenditure

Expense incurred on erection and installation of any assets are to be capitalized with the cost of assets. If any expenses incurred for major repair of an asset which enhance the useful life of assets are also to be capitalized.

Any other small amount of expense will not be capitalised and hence is a revenue expenditure. Accordingly, Rs.1000 paid on account of printing the company name and advertisement is a revenue expenses and cannot be capitallised.