CIMA BA3 · Chapter 2 · Question 8 of 8
Which of the following items of expenditure should be treated as capital expenditure?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Legal fees paid in connection with the purchase of a new office building
Explanation
Capital expenditure is spent on acquiring or enhancing non-current assets. Legal fees directly attributable to buying a building are part of the asset's cost. Repainting, repairs and insurance maintain existing assets or are running costs, so they are revenue expenditure charged to profit or loss.
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