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(a) Capital Expenditure
(b) Revenue Expenditure
(c) Deferred Revenue Expenditure
(d) None of the above
The correct answer to answer a
The answer depends upon the benefit, if the benefit is for one year it is a revenue expense and if the benefit is for more than one year and it is improved the usability of the asset (life or increase in inflows generated from the asset) then it is a Capital expenditure and depreciation to be provide prospectively based on the remaining life of the asset.
and if it do not improve the usability of the asset and the benefit of reduction in working expenses is more than 1 year then it can be treated as deferred revenue exp.
In my knowledge it should be option (a) Capital Expenditure....as it is your investment for future for improving margins. Thanks.
Its deferred Revenue Expenditure as its result is long lasting.
agree with the expert answer - A
Money spent to reduce working expenses is…..(a) Capital Expenditure
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