Mr. Grey and his friends build a company that categorise as software as a service (SaaS)...

 

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Mr. Grey and his friends build a company that categorise as software as a service (SaaS) which they name it as GreyForTeach. The company provides toolkits for teachers around the globe to use their power point designs and various teaching tools to facilitate teachers to teach online and onsite. To support their business, GreyForTeach need to buy a set of advanced computers which cost Rp.55,000,000. To purchase the set of computers, GreyForTeach uses their cash to cover 40% of the amount, and the rest of the sum, it is paid by installment basis for 5 years. Required: 1. Explain what capital expenditure is and what are the consequences of capital expenditure in the financial reports (Income Statement, Balance Sheet, and Cash Flows Statement). (8 points) 2. GreyForTeach records the above transaction as an expense because there is a cash outflow. Do you agree with their recording? Explain. (7 points) 3. Explain the effect of the purchase of a set of computers on accounting equation. (5 points) Mr. Grey and his friends build a company that categorise as software as a service (SaaS) which they name it as GreyForTeach. The company provides toolkits for teachers around the globe to use their power point designs and various teaching tools to facilitate teachers to teach online and onsite. To support their business, GreyForTeach need to buy a set of advanced computers which cost Rp.55,000,000. To purchase the set of computers, GreyForTeach uses their cash to cover 40% of the amount, and the rest of the sum, it is paid by installment basis for 5 years. Required: 1. Explain what capital expenditure is and what are the consequences of capital expenditure in the financial reports (Income Statement, Balance Sheet, and Cash Flows Statement). (8 points) 2. GreyForTeach records the above transaction as an expense because there is a cash outflow. Do you agree with their recording? Explain. (7 points) 3. Explain the effect of the purchase of a set of computers on accounting equation. (5 points)

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Capital Expenditure is the expenditure incurred for the purchase and maintenace of fixed Assets or redemption of any securities like shares Non Curren... View the full answer