+1 862 207 3288 Expenditure which results in the acquisition of fixed asset such as land, building, plant, motor vehicles, trademarks, etc. Such asset would be used in the business for a number of years.
Expenditure in connection with the purchase or erection of a fixed asset such as wages paid to workers for erecting machines, cartage paid on acquiring plant and machinery, overhauling of second hand machines etc.
Expenditure which results in the extension or improvement of fixed assets and which increases the earning capacity of such assets such as amount spent on increasing the seating capacity of a cinema hall.
All amount spent up to the point an asset is put to use is treated as capital expenditure. Thus, legal fees and brokerage paid to acquire a property and interest paid on loans taken to acquire the asset for the period before the asset is put to use is capital expenditure and is added to the cost of such asset. But interest on loan after the asset is put to use is treated as revenue expenditure.
Expenditure incurred on the purchase of second hand asset and on putting such asset into working condition.
Expenditure incurred for establishing the business, e.g., the cost of patent, preliminary expenses, goodwill etc.
Interest on capital up to the point production is ready to commence or during the period of formation of company.
