Answer Happy

Your manager has asked you to advise your client Kofi Gyato,
owner and director of Kofi Gyato Limited, on the implications of
the proposed transaction.
Your client has identified an opportunity to develop his business
by manufacturing the products which he sells. To do this he would
need to buy a machine which will have an expected life of ten
years. He has received this quotation for the
machine.
Price of machine GHȼ 70,000
Delivery and installation GHȼ 3,500
Commissioning costs GHȼ 1,500
Annual maintenance costs GHȼ 3,500
Required:
Prepare a report to your client. Your report should:
(a) Explain the difference between capital and revenue
expenditure, and how each type of
expenditure affects the accounts of a business.
(b) Indicate which of the costs of the machine should be
considered as capital cost and
which should be considered as revenue cost.
(c) Define depreciation and explain how the accounting
entries for depreciation affect each
element of the accounting equation.
(d) Indicate:
(i) What the annual charge against profit will be:
(ii) One way in which the statement of comprehensive
income will change if this
development takes place.