UNDERSTANDING GOODS AND CAPITAL EXPENDITURES (ACCOUNTING)

Goods expenditure is the purchase of goods and services that use up to produce market and non-market goods and services. Shopping for goods, among others, can group into 3 categories of shopping, namely:

  1. Expenditures for the procurement of goods and services.

Expenditures for the procurement of goods that do not meet the capitalization value in the financial statements are categorize into operational expenditures and non-operational expenditures. Expenditures for the procurement of consulting services are not include in the category of services expenditure group.

  1. Maintenance spending.

Maintenance expenditures that are incurre and do not increase and extend the useful life and or are unlikely to provide future economic benefits in the form of capacity, production quality, or improvement of performance standards are still categorize as maintenance expenditures in the financial statements.

  1. Shopping trip.

Travel expenditure borne not for the purpose of acquiring fixed assets is categorize as travel expenditure in the financial statements.

Capital Expenditures are expenditures make in the context of capital formation which are to add to fixed assets/inventory that provide benefits for more than one accounting period, including expenditures for maintenance costs which are to maintain or increase useful life, increase capacity and quality of assets.

Capital Expenditures can categorize in 5 (five) main categories:

  1. Land Capital Expenditures

Land Capital Expenditures are expenditures/costs use for the procurement/purchase/waiver of settlement, transfer of name and land lease, vacancy, backfill, leveling, land preparation, issuance of certificates, and other expenditures in connection with the acquisition of land rights and until the land in question is in good condition. ready.

  1. Equipment and Machinery Capital Expenditures

Equipment and Machinery Capital Expenditures are expenditures/costs use for the procurement/addition/replacement, and increasing the capacity of equipment and machinery as well as office inventory that provide benefits for more than 12 (twelve) months and until the said equipment and machinery are in ready-to-use condition.

  1. Building Capital Expenditures

Capital Expenditures for Buildings and Buildings are expenditures/costs use for procurement/addition/replacement, and includes expenditures for planning, supervising and managing the construction of buildings and structures that increase capacity until the said buildings and structures are in a ready-to-use condition.

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