Question

In the following case, indicate the amount to be debited as Capital Expenditure and Revenue Expenditure:

A sum of ₹ 40,000 was spent on a machine consisting of ₹ 30,000 for increasing its production capacity, ₹ 1,000 for repairs and ₹ 9000 for replacement of worn-out parts.

Answer 1

Capital ₹ 30,000, Revenue ₹ 10,000 (9,000 + 1000).