Which of the following expenditures is classified as capital expenditure in accounting?
Answer and explanation
Correct answer: A. Legal expenses incurred to acquire title to a newly purchased factory land
- Step 1: Understand the distinction between capital and revenue expenditure.
- Step 2: Expenditures that result in the acquisition of a permanent asset or perfecting its title give enduring benefits and are capitalized.
- Step 3: Regular maintenance, insurance, and salaries maintain operational capacity and are revenue expenses.
Answer
Legal expenses incurred to acquire title to a newly purchased factory land.
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