Question No 02 Chapter No 17

Question No 02 Chapter No 17

02. State whether the following expenditure are capital, Revenue or Deferred Revenue. Give Reason:

  1. Furniture of book value of Rs 10,000 were sold off at Rs 2,500 and the furniture of the value of Rs 6,000 were acquired, Cartage on purchase Rs 50.
  2. Temporary huts were constructed costing Rs 25,000. these were necessary for the construction of the new building and were demolished when the building was ready
  3. Replacement of old machinery by a new one.
  4. Rs 40,000 were Spent in dismantling and removing the machinery from old site to a more suitable site.
  5. Removal of stock from old site cost Rs 20,000. the new site is more favorable located.

The solution of Question No 02 Chapter No 17: –

(i)Rs loss of Sale Of Rs 7,500 will Revenue Expenditure and Rs 6,050 is capital Expenditure.
(ii)It is a capital Expenditure and will be Debited to Building Account because the expenses have been incurred before the Building is put in use.
(iii)It is a capital Expenditure and will be Debited to Machinery Account because the expenses have been incurred before the Factory is put in use.
(iv)It is a Revenue Expenditure and will be Debited to Damages Account
(v)It is a Deferred Expenditure so that entire burden may not fall on one year.

 

The provision in accounting: Types and Treatment

Also, Check out the solved question of all Chapters: –

D K Goel – New ISC Accountancy -(Class 11 – ICSE)- Solution

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ISC Accounts 11 20 Image min 197x300 - Question No 02 Chapter No 17 - D.K Goal 11 Class
D K Goel accountancy +1 – ISC_Accounts_11_20_ImageQuestion No 42 Chapter No 11 – D.K Goal 11 Class

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