ICAEW AF · Chapter 11 · Question 2 of 13
Which of the following is capital expenditure?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Building an extension that increases the floor area of a warehouse
Explanation
Capital expenditure creates or enhances a non-current asset and is recognised in the statement of financial position. An extension adds to the asset's capacity, so it is capitalised. Repainting, minor repairs and insurance maintain the asset or are running costs, so they are revenue expenditure charged to profit or loss.
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