Question

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

Answer 1

Answer:

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.