Hi..
A huge plant at a factory site was completely destroyed on fire. The management decided to replace it with a new plant of the same features, size and capacity as that of the previously destroyed plant.
Now... Whether this expense has to be capitalised or treated as revenue expense???
This is treated as Capital Expenditure. Beacuse heavy expenditure are made for replacing destroyed Plant & It is the one time expenses & it based on future earning.
Yes, it is your Capital Expenditure....................
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