1 Capital Expenditure
Capital expenditure is recognized in SFP as non-current assets.
Capital expenditure is intended to promote growth rather than maintaining the existing level of profitability. It does not matter, even if capital expenditure do not bring intended outcome.
Capital expenditure is intended to provide economic benefits for more than one accounting period.
1.1 Capital Expenditures
- Property, plant & equipment
- Long-term investments
- Development expenditure
2 Revenue Expenditure
Revenue expenditure is recognized in SOCI as expense for the period.
Revenue expenditure is intended to run day-to-day operations. Revenue expenditure is made sustain existing level of profitability. Reduction in revenue expenditure may result in decreased profitability.
Revenue expenditure is intended to provide economic benefits from more than one accounting period.
2.2 Revenue Expenditures
- Cost of sales
- Selling distribution expense
- Administration expense
- Research expense
- Repair & maintenance expense
- Utility bills expense
Note: The above list is not conclusive; you need to demonstrate the conceptual understanding of capital and revenue expenditure to classify.