Question

Identify the type of expenditure incurred in building temporary huts for workers engaged in construction of a factory building.

Options

• Revenue Expenditure

• Deferred Revenue Expenditure

• Capital Expenditure

• Capital Receipts

Answer 1

Capital Expenditure

Explanation:

Costs of erecting temporary huts for workers are capital because they form part of the cost of constructing the factory (incurred to make the fixed asset ready for use), even if the huts are later demolished.