Payment of an invoice for advertising 3 Costs of clearing the site ready for an extension to the factory building 4 Signwriting on the outside of the new delivery vehicles 5 Redecoration of the office 6 Payment of delivery driver’s wages
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
- State whether each of the below is Capital Expenditure or Revenue Expenditure.
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1 |
Purchase of new delivery vehicle |
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2 |
Payment of an invoice for advertising |
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3 |
Costs of clearing the site ready for an extension to the factory building |
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4 |
Signwriting on the outside of the new delivery vehicles |
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5 |
Redecoration of the office |
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6 |
Payment of delivery driver’s wages |
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7 |
Fuel for delivery vehicles |
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8 |
Fitting of shelving in delivery vehicle |
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9 |
Clay for making the pets toys |
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10 |
Wages of sales staff |
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11 |
Purchase of potters wheel for use in the business |
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12 |
Installation costs for the potters wheel |
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13 |
Wages os staff operating the potters wheel |
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14 |
Redecoration of store room |
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15 |
Payment of extra wages to own staff for fitting the alarm and cctv |
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16 |
Payment of architect fees for designing the proposed new shop |
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17 |
Purchase of new telephones system for the business |
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