GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Choose the wrong statement
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Legal fee to acquire property is capital expenditure
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Overhaul expenses of secondhand machinery purchased are revenue expenditure
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Expenses in connection with obtaining a licence for running the cinema is capital expenditure
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Amount spent for the construction of temporary hunts, which were necessary for the construction of the cinema house and were demolished when the cinema house was ready, is capital expenditure
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Explanation:
Detailed explanation-1: -Solution: (a) Overhaul expenses spent on second hand machinery purchased is a capital expenditure.
Detailed explanation-2: -Overhauling expenses for the engine of motor car to get better fuel efficiency is revenue expenditure.
Detailed explanation-3: -Machinery purchased whether new or second hand is an asset for company. So cost of machinery purchased is capital expenditure.
Detailed explanation-4: -OVERHAUL COST means the costs of labour and materials which are or would be incurred in overhaul or replacement (whichever is necessary) at the end of the Overhaul Life of the damaged or a similar Unit.
There is 1 question to complete.