Economics · Financial Accounting
A bank undergoes a digital transformation in FY 2025-26, spending ₹500 crore on core servers, ₹50 crore on staff training, ₹5 crore on annual server insurance premium, and ₹10 crore on server room modifications. According to accounting principles, how should these be categorized?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Only the server cost (₹500 crore) is capital expenditure; all other costs are revenue expenditure.
- 2Servers (₹500 crore) and training (₹50 crore) are capital expenditure; the rest are revenue expenditure.
- 3Servers (₹500 crore) and modifications (₹10 crore) are capital expenditure; training (₹50 crore) and insurance (₹5 crore) are revenue expenditure.✓
- 4All expenses totaling ₹565 crore must be treated as capital expenditure.
Correct answer
Servers (₹500 crore) and modifications (₹10 crore) are capital expenditure; training (₹50 crore) and insurance (₹5 crore) are revenue expenditure.
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