The costs of acquiring fixed assets and bringing them into the firm is a
Answer Details
The costs of acquiring fixed assets and bringing them into the firm are considered capital expenditures.
Capital expenditures refer to the costs of acquiring, improving, or replacing long-term assets that are used in the production of goods or services, and are expected to generate benefits for the business for more than one accounting period. Examples of fixed assets that are typically acquired through capital expenditures include land, buildings, equipment, machinery, and vehicles.
In contrast to capital expenditures, revenue expenditures refer to the costs of maintaining and operating the fixed assets once they are already in place, such as repairs and maintenance expenses. Recurrent expenditures are similar to revenue expenditures, and refer to expenses that are incurred on a regular basis, such as salaries and rent.
So, when a business purchases a new building or equipment that will be used for several years and generate income over time, the cost of that purchase is considered a capital expenditure. The expenses associated with maintaining or repairing that building or equipment would then be considered revenue or recurrent expenditures.