Capital expenditure and income expenditure

Capital expenditure and income expenditure:

Capital Expenditures and Revenue Expenditures The expenses of a company or business activity may be classified into one of the following two types:

Capital expenditure:

Expenditures for acquisition of non-current assets required for use in business activity and not for resale
Expenditures related to existing non-current assets that are maintained with the aim of increasing the profitability capacity.
Income expenses:

Expenses related to current assets
Expenses related to setting up a business activity (such as administrative expenses)
Expenditure on maintaining the earning capacity of non-current assets, for example, repairs and renovations
Capital expenditure has a long-term nature because the business entity intends to gain benefits from the expenditure incurred in the long term.

Revenue expenditure relates to the current accounting period and is used to generate revenue in that business activity.

Book of non-current assets:
As its name suggests, the book of non-current assets is one of the non-current assets kept by the business unit. These books form a part of the control system of a company.

Non-current asset book. The details in such a book can include the following:

Cost of
purchase date
Property description
Serial number or references
Location of property
Depreciation method
Expected useful life
book amount (net book value)
Acquisition of non-current assets
The purpose of having a list of non-current assets is to control those assets and check where they are kept.

This list is periodically reconciled with the non-current asset accounts maintained in the general ledger.

The cost of a non-current asset is any amount that has been incurred to acquire that asset and prepare it for use.
According to International Accounting Standard 16, real estate, machinery and equipment, the cost of some of the following elements is included and not included in some:

includes:

Capital expenses such as:

Purchase price
Shipping costs inside
Legal fees
Subsequent expenses that enhance the asset
Expenses of experimental production of the asset (after deducting the net proceeds from the sale of its items)
Not included

Income expenses such as:

Repairs
Rebuilding
repaint
Administrative Affairs
General overheads
Education expenses
wastage
The correct two-way registration for purchase is:
Bad non-current asset X

Just bank/cash/payments X

A separate cost account should be maintained for each classification of non-current assets, such as vehicles, equipment and plant.
Next expenses:
Subsequent expenses related to non-current assets can be recorded as a part of the cost price (or capitalized) only if it causes an increase in the benefits derived from the asset, in other words, it causes an increase in the income generated by that asset. is created

An example of the next expenditure that meets this criterion and can become capital is the development of a store building that provides more space for sales.

An example of subsequent expenses that do not meet this criterion is repair work.

Any repair should be included in the debit account of the profit and loss statement, in other words, it should be expensed.