ACCA Applied Knowledge · Financial Accounting · Tangible non-current assets
Which of the following is correctly classified as revenue expenditure?
Repainting a building to maintain its condition is revenue expenditure because it restores rather than enhances the asset and is charged to profit or loss. Legal fees on purchase, extensions and import duties on a machine are capital costs added to asset cost.
- ALegal fees on purchasing a freehold building
- BCost of an extension to a warehouse
- CRepainting a building to maintain its conditionCorrect
- DImport duties on a machine
Explanation
Repainting maintains the existing condition and does not improve future benefits, so it is revenue. Legal fees on acquiring a building, extension costs and import duties on a machine all form part of the cost of non-current assets.
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