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Student (CA Final)
44 Points Posted on 01 October 2018

My query is regarding classification of capital and revenue expenditure. 

A textile shop constructs its founders statue inside its premises. Whether to treat the expense as capital or revenue. If it is capital exp, then what is the future economic benefit?

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On 01 October 2018 at 17:42 Report
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Posted on 01 October 2018
Future economic benefit is in the form of goodwill.
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On 01 October 2018 at 17:46
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Student (CA Final)
44 Points Posted on 01 October 2018
Thanks... is there any relevant case law?
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On 01 October 2018 at 20:23
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Posted on 01 October 2018
No, I don't have any. Rather it depends on the facts and situation. Like the statue creates an identity in the customers' minds that this business is still that old reputed one, which earns loyalty of the customers.
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On 01 October 2018 at 21:27
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as an article
531 Points Posted on 01 October 2018
like...if he gain profit due to...that statue...or u get the benefit of the statue.....then u can treat as capital....but as above....its a textile shop...and making founder's statue is irrelevant....i mean... seeing founder's statue...no one will buy the material.....so it will be treated as... revenue...
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On 01 October 2018 at 21:57

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