During the Transport of Heavy Machinery, Damages Or Losses Incurred are Considered As Capital Expenditures Or Revenue Expenditures

Any loss or damage, accident, injury of a worker or an employee occurred during the business operations is considered as Revenue Expenditure as these Expenses are short term in nature i.e., equal to or less than one year and are recorded in Income Statement or Profit And Loss Account for the current period in which these are incurred.

Examples of such revenue expenditures are seen in the case of Current Assets which are damaged or lost due to fire or damaged such as Goods (Stock or Inventory or Merchandise) destroyed by fire or damaged during transportation or delivery time, etc.

Actually, any addition, extension or exchange of machinery or any other Fixed Asset is considered as Capital Expenditure as it is either added to the cost of machinery, increased the cost or brings the new ones in order to use it in the business for more than one accounting period.

So, we can say that during the transportation of heavy machinery, damages incurred are treated as Revenue Expenditures.