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4 May, 18:57

Which of the following below is an example of a capital expenditure? Group of answer choices replacing an engine in a company car cleaning the carpet in the front room tune-up for a company truck replacing all burned-out light bulbs in the factory

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  1. 4 May, 19:02
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    The correct answer is letter "A": replacing an engine in a company car.

    Explanation:

    Capital Expenditures refers to the company's expenditure on physical assets such as buildings or equipment. Capital expenditure is unusual and can not be deducted from income for tax purposes; instead, the value of capital expenditure is added to the assets of the company and the value is reduced annually by depreciation and amortization.

    Therefore, replacing an engine in a company car is a necessary, unexpected expense the firm has to incur.
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