How Would You Define Capital Expenditure And Revenue Expenditure? As An Auditor, How Would You Deal With Structural Alterations?

Capital expenditure means the amount spent. Capital expenditure results either in the acquisition of an assets or an improvement or extension to an existing assets as result in adding to the earning capacity of that asset either by increasing the output or reducing the cost of production. The list of usual capital expenditure are cost of goodwill, cost of freehold land and building an the legal charges incurred in this connection etc.

All expenses incurred in running a business such as salaries, wages, rent, lighting, stationary etc. are classed as revenue expenditure. Beside expense incurred in putting the fixed assets in proper order by repairs and renewals are also revenue expenditures.

Where an amount is expended on an existing on an asset by way of structural alterations, the question as to whether such expenditure should be capitalized or be treated as a revenue charge, will depend on how for such expenditure has helped to add the earning capacity of asset in question. To extend it has gone to enhance the earning capacity of the business, the expenditure should be capitalized and to extend to which it has served to maintain the asset at its original working the same should be treated as a revenue charge.

Capital expenditure are expenses which aren't recurring  and of a huge amount.Few capital expenditure are purchase of machinery,building,etc
Revenue expenditure are the day to day expenses of a firm, they are recurring and not of a huge amount as compare to capital expenditure. Few examples of revenue expenditure are salaries paid,rent paid,etc

Capital expenditure is the fund used by company to acquire or upgrade physical asset