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Doubt

SRINIDHI RAMJI (Student (CA Final)) (59 Points)

01 October 2018

My query is regarding classification of capital and revenue expenditure.

A textile shop constructs its founders statue inside its premises. Whether to treat the expense as capital or revenue. If it is capital exp, then what is the future economic benefit?

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4 Replies

(Guest)

Future economic benefit is in the form of goodwill.

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SRINIDHI RAMJI (Student (CA Final)) (59 Points)
Replied 01 October 2018

Thanks... is there any relevant case law?

(Guest)

No, I don't have any. Rather it depends on the facts and situation. Like the statue creates an identity in the customers' minds that this business is still that old reputed one, which earns loyalty of the customers.

shashank (as an article) (951 Points)
Replied 01 October 2018

like...if he gain profit due to...that statue...or u get the benefit of the statue.....then u can treat as capital....but as above....its a textile shop...and making founder's statue is irrelevant....i mean... seeing founder's statue...no one will buy the material.....so it will be treated as... revenue...