Which of the following expenditures is/ are capital expenditure.

Cost of making more exits in a cinema hall.

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Freight and cartage amounting to Rs. 4,000 were paid on purchase of a new plant and a sum of Rs. 2,000 was spent as erection charges of that plant.

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Spent Rs. 2,00,000 for overhauling the machinery which improved the capacity utilization and saved running expenditure by Rs. 15,000 p.a.

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All of the above

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Solution

The correct option is D All of the above
Capital expenditure refers to an amount spent to acquire or upgrade productive assets in order to increase the efficiency or capacity of the company for more than one accounting period.
Making more exits improve the efficiency of cinema hall. Freight and cartage paid on acquiring productive assets and also amount spent on overhauling the machinery improve the capacity utilization. So these are capital expenditure.

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