CAPITAL AND REVENUE: ILLUSTRATION 13

State with motives whether or not the subsequent are capital or sales receipts: L Royalty acquired from the switch of copyright.

• 2 Amount acquired on sale of a residence bought for residential purposes.
• 3. Legal rate acquired for drafting a Memorandum or Articles of Association of the company.
• 4. Royalty acquired on the hire of a mine via way of means of manner of a percent of rate of output
• 5. Amount acquired on sale of Defence Saving Certificates bought to keep earnings tax.
• 6. Insurance cash acquired below a coverage which insured towards lack of earnings on account of stoppage of enterprise because of fire.
• 7. Insurance quantity acquired below a coverage which insured inventory in alternate towards harm.
• 8 . Gratuity acquired via way of means of a worker on his retirement from the provider.
• 9. Compensation acquired from authorities on the obligatory acquisition of constructing these days built for enterprise purposes.
• 10. Amount acquired from a debtor who bought products andnwhose account became formerly written off as bad.

Solution

• 1. It is a capital receipt. The proper is being absolutely surrendered via way of means of the owner.
• 2. Capital receipt. The purpose in the back of this remoted transaction became
• now no longer to promote the residence on earnings.
• 3. It is sales receipt for the prison practitioner. We must now no longer confuse our judgement via way of means of thinking about that it’s miles a capital expenditure for the payer
• 4. Revenue receipt. The proper of mining isn’t always surrendered, as an alternative it’s miles given to be used only.
• 5. Capital receipt. The purpose in the back of the transaction became to preserve the funding. The funding became now no longer for hypothesis purposes.
• 6. It is a sales receipt as it’s miles supposed now no longer to stable a benefit however to update a sum equal to the predicted benefit.
• 7. Revenue receipt. The quantity is being acquired due to circulating asset.
• 8. It is a sales receipt due to the fact it’s miles an earnings earned via way of means of him for the provider rendered all through his employment.
• 9. It is a capital receipt. The quantity is being acquired due to constant asset.
• 10. It could be a sales receipt due to the fact the quantity is being acquired due to circulating assets.

CAPITAL LOSS

When someone incurs a capital expenditure, he receives an asset, a proper or a everlasting advantage in exchange. In case of a capital loss, the quantity invested withinside the enterprise is absolutely lost.

Examples of Capital Loss

• 1.Loss because of insolvency of a enterprise.
• 2. Loss springing up from harm or destruction Dfa Ho of an uninsured capital asset.
• 3.Theft withinside the enterprise after enterprise hours.
• 4. Loss incurred in reference to the elevating of cash for enterprise.