Capital vs. Revenue Expenditure in Accounting

Steps:

• Define capital expenditure as costs acquiring or enhancing fixed assets for long-term benefits.
• Review each option to check if it adds lasting value to an asset or is routine maintenance/operation.
• Classify additions/improvements as capital; repairs/rent as revenue.
• Select the option meeting capital criteria.

Why A is correct:

• Adding a printer enhances the computer system's functionality and value, qualifying as capital expenditure under accounting standards like IAS 16 for property, plant, and equipment.

Why the others are wrong:

• B: Rent is a periodic operating cost, treated as revenue expenditure.
• C: Repainting is minor maintenance to preserve the asset, not enhancing it, so revenue.
• D: Car repairs restore functionality without improvement, classifying as revenue expenditure.

Final answer: A