Capital expenditure vs revenue expenditure

A/c entries 1590 views 2 replies

Dhamodharan

Article Assistant

51 Points Joined May 2013

Dear Sir,

I want to clarify the doubt between Revenue Expenditure & Capital Expenditure.

Our Assessee has doing Trading Yamaha Vechile Dealar. Previous year He Opened two new Branches in some other places. and He Incurr some of Expenses for Renovate the Lease Building such as Electrical & Fittings, Tiles and Marble works etc. Wheather I want to know It should be Treated as Revenue Expensiture for this year or It is Transferred to Deferred Revenue Expenditure amortised in number of years Otherwise It should be Treated as Capital Expenditure ????

Please Suggest any Case Laws Regarding this

Thank you,

Dhamu

Replies (2)

veeru sagar

BBE M.com CA Final

473 Points Joined June 2010

Dear dham

As your client have opened the 2 other branch and have renovated the building and land which have taken by him on lease ........as per AS 19 Accounting for lease .......clearly express that the lease amount would be amortise during the life of lease .......as you client have the business of trading yamaha vehicle dealar it may not be revenue expenditure in any case bcoz revenue expenditure are the nature of recurring ( frequently happened)..so these expense should be capitalised with the value of lease and amortise during the life of lease

HARI PRASAD

M.COM

172 Points Joined June 2009

Yes, i absolutley agree with Veeru sagar sir, because any amount which wil incurre for increasing the asset value and any renowation done for the same and any aprreciaion done to the assets so those have to considerd as Capital expenses in nature and have to capitalised accordingly in finanacila statements.