Economics · Accounting Principles
A manufacturing entity decides to overhaul its machinery. The expenditure includes: ₹4,50,000 for replacing worn-out parts to restore original efficiency, ₹2,50,000 for an additional attachment increasing production capacity from 1,000 to 1,500 units/hour, ₹50,000 for annual maintenance, and ₹30,000 for aesthetic re-painting. How should these expenditures be classified?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Total ₹7,80,000 as Revenue Expenditure
- 2₹2,50,000 as Capital Expenditure and ₹5,30,000 as Revenue Expenditure✓
- 3₹7,00,000 as Capital Expenditure and ₹80,000 as Revenue Expenditure
- 4₹7,30,000 as Capital Expenditure and ₹50,000 as Revenue Expenditure
Correct answer
₹2,50,000 as Capital Expenditure and ₹5,30,000 as Revenue Expenditure
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