Capital Expenditures & Revenue Expenditures
Veronica rowe
XACC/291
Jan 29, 2014
Shontell Chrisman

Capital Expenditures & Revenue Expenditures
Capital expenditures; a sum spent to procure or development of a long term asset, such as buildings or equipment. Under normal accounting methods the cost is put under equipment, plant, property. Everything except the cost of land can be charged as depreciation expenditure over the useful life of the asset. Capital expenditures are put on financial report as an asset on balance sheet. Capital expenditure rewards are spread over several accounting periods. Capital expenditures can include replacement cost to delivery cost, legal charges and everything in between.
Revenue expenditures; are amounts distributed out instantaneously, they match entries of the existing accounting period. Scheduled maintenance is a revenue expense, because they are charged without waiting to an account like maintenance and repairs expenditures. Major repairs do not affect the life of the asset. Revenue expenditures are put on financial report on the income statement. Revenue expenditures may include maintenance charge, repair, and renewal and everything in between.
Both are classified as assets. The difference between the source of Capital and Revenue expenditures is special, because Capital is comprised of cost related to fixed assets, and Revenue expenditures affect is temporary, they come often and contains no physical presence, and does not appear on balance sheet and reduces revenue. Capital expenditure affects are long term it does always repeat, it has a physical appearance, and it appears on balance sheet until its rewards are fully depleted.
“Companies must use good judgment in deciding between a Revenue expenditure and Capital expenditure.” (Weygandt, Kimmel & Kieso, 2010, page 409) Find the differences between the