Capital Expenditure - Revenue Expenditure

Davidbyworth

Hi All

With regard to a landlord who has uplifted the garden and landscaped. Would this be capital or revenue expenditure?

Thanks

davealucas

The likelihood is that the garden and landscaping would last longer than one accounting period and by that definition would be capital expenditure.

Davidbyworth

Thanks, however my understanding is that the length it purchase would last is not the deciding factor. for example, replacing a broken window would be revenue expenditure, but would likely last longer than an accounting period?

crispy

Hi,
I guess you would have to ask whether the expense was an improvement / significant alteration(which would be disallowed as capital) or simply a repair restoring / repalcing an asset to it's orginal condition (allowed as revenue expense - as per your window example).

It sounds like capital to me.

davealucas

@Davidbyworth there are some grey areas in the whole thing. I take your point on the window, but such expenditure would be very minimal and not worth capitalising. You can argue the same for, say, a calculator.

Coming back to the point in hand, if you were just replacing some flowers, vegetables etc in the garden then I would argue it is revenue, but in this case you was talking about landscaping the garden. That wouldn't be a simple repair or refreshment of an existing asset and would meet the definition of creating an asset.