Capital and revenue expenditure

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Shaik Fazal (Querist)
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12 December 2017 An asset is manufactured at a cost of rs 200000 on 1st October for which loan of rs 150000 was taken on 1st April of that year at 10% p.a.The entire loan was outstanding till the end of the financial year. Which of the following is correct?

A. Capital expenditure Rs 200000 and revenue expenditure rs 15000

B.Capital Expenditure Rs 207500 and Revenue Expenditure Rs 7500.

C. Capital expenditure Rs 215000

D.None of the above.

Please answer with proper explanation.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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12 December 2017 B is correct. Inference - Accounting standard -16.

Shaik Fazal

Shaik Fazal (Querist)
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13 December 2017 How to calculate the Capital expenditure and revenue expenditure out of the above information sir?

RAJA P M

RAJA P M (Expert)
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13 December 2017 Bcoz., The loan from 1st October (only Six months of interest)

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