What Is Capital Loss And Revenue Loss?
Capital receipts, like capital expenditures do not affect profit, and are either shown as a liability or more often as a reduction from the assets. Any excess realization over the book value of an asset may, however, be treated as a revenue receipt and accounted for as such. It is, therefore, essential to know the distinction. Examples of Capital Receipts: Capital invested by the owners of the business. Amount received from sales of fixed assets or investments. Conversion into Cash of any Asset except stock. Loans received.
