Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 9 - Reporting and Analyzing Long-Lived Assets - Questions: 11

Answer

(a) Ordinary repairs of the asset are normal expense to maintain the assets in working condition. The normal servicing and repairs of the assets is revenue expense and will be charged as an expense in the income statement.

Work Step by Step

Capital expenditure is the expenditure, incurred to increase the operational efficiency or useful life of the asset. This expense is debited to the cost of the asset, to increase the cost of the asset.
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