Capital expenditure: It refers to the amount spent on acquiring, maintaining, and improving the fixed assets that increases its productivity or extends useful life. It provides benefits in the future period. Revenue expenditure: It refers to the amount spent on normal maintenance and repairs of fixed assets to generate revenue in the current period. It is incurred to provide benefits only in the current period. To explain: The difference in the accounting treatment of repairs and maintenance, additions, improvement and rearrangement.

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Chapter 11, Problem 11.19Q

To determine

Capital expenditure: It refers to the amount spent on acquiring, maintaining, and improving the fixed assets that increases its productivity or extends useful life. It provides benefits in the future period.

Revenue expenditure: It refers to the amount spent on normal maintenance and repairs of fixed assets to generate revenue in the current period. It is incurred to provide benefits only in the current period.

To explain: The difference in the accounting treatment of repairs and maintenance, additions, improvement and rearrangement.

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