A government department incurs an expenditure of ₹5,00,000 on the repair of a building. Under the General Financial Rules (GFR), this expenditure should be classified as:
A.Contingent expenditure
B.Capital expenditure, as it improves the building
C.Revenue expenditure, as it maintains the existing condition
D.Deferred revenue expenditure, to be written off over 5 years
Explanation:
Under standard accounting and GFR principles, routine repairs and maintenance that do not increase the capacity or useful life of an asset are classified as revenue expenditure, not capital.
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