An expenditure that increases the capacity or efficiency of a plant asset that extends the asset's life is known as a revenue expenditure.

Question

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An expenditure that increases the capacity or efficiency of a plant asset and extends the asset's life is known as a capital expenditure. Revenue expenditure, on the other hand, is an expense incurred in the normal course of business to maintain the earning capacity of a plant asset.

An Expenditure That Increases the Capacity or Efficiency of a Plant