The following expenditures relating to delivery truck were made by Ilham Sdn. Bhd. on 1 September 2020.

i. Paid RM198,000 for the price of the asset. ii. Paid RM2,400 for the installation of special shelving in the truck. iii. Paid RM1,400 for painting and lettering. iv. Paid RM3,600 for registration of commercial motor vehicles licence. v. Paid RM3,000 for one-year insurance policy. vi. Paid RM1,450 for sales tax.

You are required to:

a) Briefly explain the difference between capital expenditure and revenue expenditure.

b) Prepare the journal entry for purchase of delivery truck and the depreciation expense as at 31 December 2020 using straight line method (assume no salvage value at the end of useful life.). The truck expected useful life is 5 years.

c) if the company decide to dispose the asset at the end of december 2023 with the selling price of rm 35,000 show the journal entries to record the disposal