Classify the following expenditures as capital or revenue expenditure/receipt: (iii) Cost of testing whether the equipment is functioning properly.
CA Foundation · Accounting · RTP · September 2026
Classify the following expenditures as capital or revenue expenditure/receipt: (iii) Cost of testing whether the equipment is functioning properly.
Suggested Answer and Working Notes:
Testing costs are incurred before an asset is put into use and this cost is necessary to bring an asset to its working condition. Hence, it is Capital expenditure .
Topics: Capital and Revenue Expenditures and Receipts
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