With reference to the expenditure made by an organisation or a company, which of the following statements is/are correct?

1. Acquiring new technology is capital expenditure.

2. Debt financing is considered capital expenditure, while equity financing is considered revenue expenditure.

Select the correct answer using the code given below:

The correct option is 1 only.

Let us analyze the statements step-by-step to understand why this option is correct.

Analysis of Statement 1: "Acquiring new technology is capital expenditure."
Capital expenditure (CapEx) refers to the funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. Since acquiring new technology is an investment that provides long-term economic benefits and increases the productive capacity of the organization over multiple accounting periods, it is classified as a capital expenditure. Therefore, Statement 1 is correct.

Analysis of Statement 2: "Debt financing is considered capital expenditure, while equity financing is considered revenue expenditure."
Financing activities, whether through debt (like loans or bonds) or equity (like issuing shares), represent how a company raises capital. They are recorded in the financing section of the cash flow statement and affect the liabilities and equity on the balance sheet. They do not constitute capital or revenue expenditures, which instead relate to the deployment/spending of funds.
Specifically, revenue expenditures are short-term expenses used in the daily operations of a business (like salaries, rent, or maintenance). Neither debt financing nor equity financing fits these definitions of expenditure. Therefore, Statement 2 is incorrect.

Since only the first statement is correct, the correct choice is 1 only.