I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART D: RECORDING TRANSACTIONS AND EVENTS 

 

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2.2 Example: capital and revenue expenditure 

A business purchases a building for $30,000. It then adds an extension to the building at a cost of 

$10,000. The building needs to have a few broken windows mended, its floors polished and some 

missing roof tiles replaced. These cleaning and maintenance jobs cost $900. 

In this example, the original purchase ($30,000) and the cost of the extension ($10,000) are capital 

expenditure, because they are incurred to acquire and then improve a non-current asset and so can be 

capitalised as part of it. The other costs of $900 are revenue expenditure, because these merely