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Distinguish between capital and revenue expenditure The following costs were also incurred by Napa Ltd during the financial year ended 30June    20X7: Interest on loan to purchase microcomputer. Cost of software for use with the microcomputer. Cost of customizing the software for use in Napa Ltd.'s business. Cost of paper used by the computer printer. Wages of computer operators. Cost of ribbons used by the computer printer. Cost of adding extra memory to the microcomputer. Cost of floppy disks used during the year. Costs of adding a manufacturer’s upgrade to the microcomputer equipment. Cost of adding air conditioning to the computer room. Required: Classify each of the above as capital expenditure or revenue expenditure.

Distinguish between capital and revenue expenditure The following costs were also incurred by Napa Ltd during the financial year ended 30June    20X7: Interest on loan to purchase microcomputer. Cost of software for use with the microcomputer. Cost of customizing the software for use in Napa Ltd.'s business. Cost of paper used by the computer printer. Wages of computer operators. Cost of ribbons used by the computer printer. Cost of adding extra memory to the microcomputer. Cost of floppy disks used during the year. Costs of adding a manufacturer’s upgrade to the microcomputer equipment. Cost of adding air conditioning to the computer room. Required: Classify each of the above as capital expenditure or revenue expenditure.

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter11: Performance Evaluation And Decentralization
Section: Chapter Questions
Problem 21BEB
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  1. Distinguish between capital and revenue expenditure

The following costs were also incurred by Napa Ltd during the financial year ended 30June    20X7:

  1. Interest on loan to purchase microcomputer.
  2. Cost of software for use with the microcomputer.
  3. Cost of customizing the software for use in Napa Ltd.'s business.
  4. Cost of paper used by the computer printer.
  5. Wages of computer operators.
  6. Cost of ribbons used by the computer printer.
  7. Cost of adding extra memory to the microcomputer.
  8. Cost of floppy disks used during the year.
  9. Costs of adding a manufacturer’s upgrade to the microcomputer equipment.
  10. Cost of adding air conditioning to the computer room.

Required:

Classify each of the above as capital expenditure or revenue expenditure.

 

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