Question

Maintenance of existing assets is considered an operational expense, as it is a recurring cost that doesn't create a new asset or significantly increase the value of an existing one.

• A. Purchase of a new machine for the factory
• B. Recovery of a loan given to a state government
• C. Investment in research and development for a new product
• D. Building a new office complex for the company

Answer 1

Answer:

B. Recovery of a loan given to a state government

• A capital receipt is a non-recurring income for the government that either creates a liability or reduces a financial asset.

• Recovering a loan reduces the government's assets (the loan it was owed), making it a capital receipt.