Multiple choice

Expenses incurred on the overhauling of a second-hand machine is

  1. revenue expenditure

  2. deferred revenue expenditure

  3. capital expenditure

  4. None of these

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 It is a capital expenditure, since it is incurred to bring the second-hand machine to a working condition. The machinery is second-hand which means it is already used. We have purchased the machinery and we have to incur the expense on overhaul, so that we can continue to use it. So it is to be added to the cost of machinery. It is a capital expenditure.

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