PRC-1 · Chapter 6 · Question 75 of 100
A business has a building costing Rs. 15.5m and machinery costing Rs. 10.2m. During the year, building extension costs Rs. 1.5m, building repairs cost Rs. 0.5m, and a machinery capacity overhaul costs Rs. 1.2m. What is the capitalized cost of the building at year-end?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 17.0m
Explanation
The extension (1.5m) is a capital expenditure and is added to the building's cost (15.5m + 1.5m = 17.0m). The repairs (0.5m) are revenue expenditure and are expensed, not capitalized.
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