Q.Expenditure incurred ₹ 20,000 for trial run of a newly installed machinery will be :

Expenditure on the trial run of a newly installed machine is incurred to make the asset ready for use, so it is capital expenditure (added to the machine's cost). The correct answer is option (a).

In the Tamil Nadu HSC Class-11 Accountancy syllabus, capital expenditure includes not only the purchase price of a fixed asset but also every cost incurred to bring it into working condition — freight, installation, and trial-run/test-run expenses.

A trial run is done to test the newly installed machinery before regular production begins. Since it is a one-time cost needed to make the asset usable, its benefit lasts beyond the current year, so:

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