Capital/Revenue

[Nicola]

How do you tell if a purchase should be treated as capital expenditure or revenue? <BR><BR>The question I'm working on is how would you treat bricks to build an extension to offices.<BR><BR>

[Melanie]

A general guide is whether the purchase is a repair or an improvement. Repairs (or replacement equipment) are generally treated as revenue items, improvements (or new equipment) generally treated as capital expenditure. The purchase of bricks to build an extension would form part of the capitalised cost of the extension as a whole.<BR><BR>Hope this helps :o)