Expenditure incurred for the innovation of Guest house
building is revenue nature or capital nature ??
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Answer Posted / babhu kanchupalli
It is a capital expenditure.....because what ever the cost incurred to obtain the fixed asset and the cost incurred to increase the useful life. of the asset.....is included in the value of an asset.
For example : when we purchase a bike....we have to incure some extra amount for extra fittings like.....seat covers,helmet,accident guards,tank cover....like that.....all these expenses includes under bike cost.....when some asks about the price of your bike....you simply says the amount which includes all these extra fittings amount.......
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