• 1 Marks

FA – May 2013 – L1 – SA – Q12 – Accounting Concepts

This question tests the understanding of capital expenditure items.

Which of the following should be classified as capital expenditure?

A. The annual depreciation of leasehold premises
B. Computer repairs and maintenance cost
C. Solicitors’ fees in connection with the purchase of leasehold premises
D. The wages of the machine operators
E. The interest paid on a loan

C. Solicitors’ fees in connection with the purchase of leasehold premises

Explanation:
Capital expenditure includes costs directly attributable to the acquisition of a non-current asset, such as solicitor’s fees for purchasing leasehold premises.

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