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General Accounting Discussions: Capital or Revenue Exp

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    • CommentAuthorMA_UK
    • CommentTimeApr 24th 2007
     
    During the year an extension was bulit on the Shop Premises. At the same time,the original shop was redecorated and the flooring was replaced. The cost for this work were as follows:

    Decoration of Original Shop £2200
    Replacement of Flooring £1300

    Which one is Capital or Revenue Expense (both). Even the question doesn't specify that Replacement of Flooring improve the quality.


    Please reply . Thanls a lot.
    • CommentAuthorMA_UK
    • CommentTimeApr 24th 2007
     
    I think Replacement Flooring would be considered Capital Exp (as non current asset) because we are not going to replace floor in the shop premises at 3 or 4 time in a year.
    • CommentAuthorabril
    • CommentTimeMay 1st 2007
     
    replacement flooring definitely is a capital expenditure because it will benefit not only the current year but also the coming years, it has to be depreciated. decoration of original shop depends on the company's policy. normally it is expensed to avoid clerical work like recording of depreciation.
    • CommentAuthoraakbar
    • CommentTimeMay 7th 2007
     
    Decoration of office is a fixed asset and u can put under "Fixtures"

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