Capital Expenditure VS Revenue Expenditure

Capital Expenditure

Revenue Expenditure

-Purchase of non-current assets that will generate revenue over a number of years

-Operational costs required for the generation of sales

-Initial costs associated with getting the non-current asset into working order

-Costs are used up in period

-Asset improvement costs (NOT REPAIR COSTS)

-Repair costs to keep an asset operational (NOT IMPROVEMENT COSTS)

-These costs increase revenue generation or enhance cost saving in the future

-Matched against period to which they relate

-Matched against revenue to which they relate

E.g. New vehicles used in more than 1 period

E.g. Rent