Tangible and intangible Assets
XACC/291
January 11, 2015
Tangible and intangible Assets
Expenditures are unavoidable for any company to exist in the competitive market, to expand the business or to find new opportunities to open up beneficial business in those areas, etc. Expenditures is defined as payments of cash or cash equivalent for goods or services, or a charge against available funds in settlement of obligation as evidenced by a source document like invoice, voucher, receipt, etc. All payments made by a company can be broadly categorized in to capital expenditure and revenue expenditure.
Revenue expenditures are an immediate charge as an expense against revenue expenditures. Companies record such repairs as debits to Repair (or maintenance) Expense as they are incurred. Capital expenditures are expenditures that increase the company’s investment in productive facilities (University of Phoenix, 2011).
According to “Difference Between Capital Expenditures and Revenue Expenditures” (2010-2014), it states that both capital and revenue expenditures are crucial for a company to run successful and profitable business. However, both types of expenditures have some differences that distinguish on from the other.
The "Difference Between Capital Expenditure And Revenue Expenditure" (2010-2014) website Capital expenditures can be capitalized and depreciated over the useful life of the asset, while revenue expenditures must be expenditures must be expended on the statement of comprehensive income (Profit or loss account) for the accounting period in which it has occurred. Revenue expenditures is recurring in nature, while capital expenditures is not. Capital expenditures are made for a period more than one accounting period, but revenue expenditures are made for one accounting period ("Difference Between Capital Expenditure And Revenue Expenditure", 2010-2014).
Intangible assets represent rights, privileges, and competitive advantages owned by...