Explain difference between revenue and capital expenditures

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Question - John is contemplating of acquiring a machine for his confectionery startup on July 1 of the current year for $750,000. He understands there are three commonly used methods for calculating depreciation on capital assets. Calculate the annual depreciation expense for each year of the machine's life (estimated at 5 years or 20,000 hours, with a salvage value of $75,000). During the machine's 5-year life its hourly usage was: 3,000; 4,000; 5,000; 5,000; and 3,000 hours.

Should the purchase of this machine be treated as revenue expenditure or capital expenditure?

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

Reference no: EM132604008

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