Answer to Question #82546 in Accounting for oludare david

Question

, state the ways in which capital expenditures are treated in accounts and why

Answer 1

Accounting standards require to add the capital expenditure to an asset account and then to charge it as an expense over the useful life of the asset, using the mechanism of depreciation. This is because the capital expenditure generate benefit for company during more the one period and this approach allows to allot expenses, do not underdraw revenues of current period and do not overstate future revenues.