Which of the following expenditures is/ are not capital expenditure?

30,000 were spent on minor repair to machinery.

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Rs. 2,000 were paid as municipal tax in connection with a building which was purchased last year

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A temporary room constructed for Rs. 25,000 for storing raw material for the construction of a big building.

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All of the above

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Solution

The correct option is B Rs. 2,000 were paid as municipal tax in connection with a building which was purchased last year
Capital Expenditures are for fixed assets, which are expected to be productive assets for a long period of time. All the amounts paid upto the point an asset is ready for use is included in cost of that asset.
Municipal tax paid for building purchased lats year is revenue expenditure because this is paid after the building becomes operational. Capital expenditures tend to involve large amounts. Amount spent on repair is quite large. So this is capital expenditure. Room constructed whether temporary or permanent is an asset. So this is also capital expenditure.

Suggest Corrections

Similar questions

Rectify the following errors:-

1) Purchase of Building was passed through purchases Book as Rs 65,000.
2) Wages paid for construction of building Rs 15,000 was wrongly debited to wages account.
3) Expense of installation of Machinery was debited to installation charges account Rs 55,000.
4) Brokerage paid Rs 600 for purchase of investment were debited to brokerage account.
5) Old Motor car purchased was debited to repairs account Rs 7,000.
6) Materials purchased for construction of Building was debited to purchases account Rs 9,000.

Q. Pass the necessary Journal entries to rectify the following errors:
(i) ₹ 15,000 paid as wages for the construction of office building debited to Salaries Account.
(ii) ₹ 20,000 spent on the purchases of material for the construction of building debited to Purchases Account.
(iii) ₹ 50,000 spent on the extension of building was debited to Building Repairs Account.
(iv) ₹ 25,000 spent on whitewash of a new building was charged to Building Repairs Account.
(v) ₹ 1,000 paid as installation charges for newly purchased second hand machinery posted to Cartage Account.
(vi) ₹ 10,000 paid as repairing charges on the reconditioning of a newly purchased second hand machinery debited to General Expenses Account.
(vii) ₹ 5,000 paid as repairing charges of an existing machine in use charged to Machinery Account.
(viii) ₹ 10,000 paid by cheque for a printer was charged to the Office Expense Account.

Rectify the following entries :

(i) Purchase of building was passed through purchase book amounting to Rs 80,000.

(ii) Wages paid for construction of building was debited to wages account with Rs 20,000.

(iii) Expenses of erecting of a shed amounting to Rs 3,000 were debited to the expenses account.

(iv) Wages paid for extension of building was debited to wages account amounting to Rs 7,000.

(v) Repair to second hand car purchased was debited to repairs account with 18,000

(vi) Material purchased for construction of building was debited to purchase account amounting to Rs 28,000.

Trial balance of Radhika did not agree. Radhika put the difference to suspense account. subsequently she located the following errors.

1) Furniture purchased for Rs 6,000 was posted to purchases account as Rs 600.
2) Repairs to Machinerry Rs 500 were debited to Machinery account.
3) Wages paid for installation of Machinery Rs 750 was posted to wages account.
4) Purchased material Rs 8,000 and wages Rs 2,000 were used for construction of building not recorded in the books.
5) Total of sales returns book Rs 2,000 was not posted to the ledger.
6) Old Furniture sold to Dinesh at its book value of Rs 2,500 was recorded through sales book.

Q. State with reasons whether the following are capital or revenue expenditures:
(i) A new machine is purchased for ₹ 60,000, ₹ 800 were spent on its carriage and ₹ 1,500 were paid as wages for its installation.
(ii) A sum of ₹ 10,000 was spent on painting the new factory.
(iii) ₹ 5,000 paid for the erection of a new machine.
(iv) ₹ 2,000 were spent on repairs before using a second hand generator purchased recently.
(v) ₹ 1,500 were spent on the repair of a machinery.
(vi) ₹ 10,000 was paid as brokerage on issue of shares and other expenses of issue were ₹ 25,000.

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