Question: Why Is Repayment Of Loan A Capital Expenditure?

Is Depreciation a capital expenditure?

Depreciation expense is used in accounting to allocate the cost of a tangible asset over its useful life.

Over the life of an asset, total depreciation will be equal to the net capital expenditure.

This means if a company regularly has more CapEx than depreciation, its asset base is growing..

Is interest on loan a capital expenditure?

Capital Expenditure are those which are incurred to get the benefits in coming future. … Hence interest on loan taken for the purchase of fixed assets is a capital expenditure.

What is meant by capital expenditure?

Capital expenditures (CapEx) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. CapEx is often used to undertake new projects or investments by a company.

What are the features of capital expenditure?

In general, an expense incurred to increase the revenue-generating capacity or reduce the cost of production can be considered a capital expenditure. They have a quality of permanence and have a useful life or a productive purpose spanning more than one accounting period.

Is repayment of loan a capital expenditure?

Repayment of loan is a capital expenditure as it causes reduction in liabilities of the government. We know, capital expenditure refers to those expenditures which either creates assets for the government or causes reduction in liabilities of the government.