Is it revenue or capital expenditure
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Woods' Business Accounting 10th edition p260
"Painting outside of new building - capital"
BPP Unit 5 Course Companion 2006 p98
"Costs of decorating a new building - revenue"
Not the only example of contradictions in my studies, but can someone please explain what the rules are concerning capital / revenue expenditure?
Am I the only one who finds different, contradictory information in different places?
"Painting outside of new building - capital"
BPP Unit 5 Course Companion 2006 p98
"Costs of decorating a new building - revenue"
Not the only example of contradictions in my studies, but can someone please explain what the rules are concerning capital / revenue expenditure?
Am I the only one who finds different, contradictory information in different places?
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Re:Is it revenue or capital expenditure
In relation to property, capital expenditure would be something that added to the value of the asset - i.e. improvements. Revenue expenditure would be the running costs of the asset - for a property this would usually be maintenance.
I think that in this case it depends on the definition of 'decoration'. If decoration means painting the inside to make the building usable then it would count as revenue expenditure.
Painting the outside of the property might count as maintenance on an older building but hardly with a new one. It's an improvement and thus capital expenditure.
It is, however, one of those things that's not really cut and dried, in the AAT world as long as you make a reasonable case for your decision you'll be OK. In the real world it'll ultimately be how your local HMRC office commands you to treat it.
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