Fixed asset expenditure is classified into two parts namely capital expenditure and revenue expenditure. Capital expenditure is the expenditure that is included in the cost of fixed asset. Purchase cost and delivery cost are included in capital expenditure. With manuals as treatment of capital and expenditure homework answers, you will get a well analyzed and detailed idea of this whole process and therefore
A company may purchase machinery that is needed from a distant land, and there would be transportation charge involved while transporting material from that distant land. The transportation charge is called delivery charge. Discount received while the purchase is reduced and up gradation of machinery, costs are included under capital expenditure.
Companies need to upgrade their machinery to suit the business needs. An information technology company dealing in teleradiology services would like to keep their machines upgraded always. The reason is that radiology images are transferred online to hospitals and time is an important factor in knowing the answer. So companies doing teleradiology services would spend money on upgrading their hardware capacity and improving the software.
Purchase of office equipment, purchase of land also happens to come under capital expenditure. The benefits of capital expenditure should get for more than one year. Students may find it difficult to complete treatment of capital and expenditure homework answers due to technical knowledge involved.
Replacement cost is another cost that comes under capital expenditure. There are occasions in which a company has to replace an existing vehicle with new one. The reasons can be many >Sometimes the vehicle would have met with an accident and would not be in a condition to get it repaired. At that time it is better to purchase a new one. A machine can also get damaged due to unforeseen contingencies like an extra power supply or low power supply and so on.
Types of capital expenditure
Treatment of capital and expenditure homework answers: Difficult scenarios
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