Solution

Capital expenditures are those that are incurred to acquire, upgrade, or maintain physical assets such as property, plants, buildings, technology, or equipment. They are long-term investments that are expected to provide benefits for more than one year. The other three transactions are not capital expenditures. a. During the year ₹3,000 was spent on the repair of various machines is an operating expense, as it is incurred to maintain the machines in working order. c. Cost of annual white-washing of a building is also an operating expense, as it is incurred to maintain the building in good condition. d. Wages paid to workers for converting raw material into finished product is a cost of goods sold, as it is incurred to produce the finished product. Therefore, the only transaction that is a capital expenditure is b. ₹15,000 spent on repairs before using a second-hand car purchased recently. This is because the repairs are incurred to prepare the car for use, and the car is a long-term asset that is expected to provide benefits for more than one year.